The prevention of Money Laundering Act was enacted in the year of 2002. After enactment of this Act various provisions were challenged by questioning the constitutional validity in various petition before the Hon'ble Supreme court. This article is a critical analysis whether those provisions of PMLA are constitutionally valid or not. In this article we have first stated the general overview of Money Laundering and PMLA, then we have discussed the constitutionality of various provisions of PMLA and conclusive point of view.

What is money laundering?
The process of concealing the origin of money, often obtained from illicit activities such as drugs, trafficking, corruption, embezzlement or gambling, by converting into a legitimate source, is known as money laundering.

Section 3 of Prevention of Money Laundering Act, 2002 Deals with Offence of money-laundering. According to section 3 whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering.

Prevention of Money Laundering Act, 2002
Prevention of Money Laundering Act or PMLA is an Act enacted by Indian Parliament in 2002 to prevent money laundering and to provide confiscation of property derived from or involved in money laundering and formatters connected therewith.

Constitutionality of various provisions of Prevention of Money Laundering Act, 2002
Background:
A total number of 241 petitions were filed challenging the validity of the Prevention of Money Laundering Act, 2002. Constitutionality of various provisions of PMLA were challenged in these petitions.

The Hon'ble Supreme Court clubbed all those petitions and upholds Constitutional validity of this Act through a single judgment.

1. No need to Provide ECIR while arrest:
   In one of those petition it was stated that while arresting an accused for committing money laundering the service of Enforcement Case Information Report (ECIR) should be mandatory like FIR. The Hon'ble Supreme Court held that, "ECIR cannot be equated with FIR and ECIR is an internal document of ED, hence supply of ECIR to accused is not mandatory and only disclosure of reasons or grounds during arrest is enough.
    
2. Offence of money laundering (sec-3):
   According to section 3 whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering.
   
   The interpretation suggested by the petitioners that only upon projecting or claiming the property in question as untainted property that the offence of section-3 would be complete, stands rejected.
   
   The Hon'ble Supreme Court stated that, "We are clearly of the view hat the expression "and" occurring in section-3 has to be construed as "or", to give full play to the said provision so as to include "every" process or activity indulged into by anyone."
    
3. Attachment of property involved in money laundering:
   Sec 5(1) of PMLA which empowers the Director or Deputy Director to provisionally attached a property for 180 days if he has 'reason to believe' that:
   
   1. any person is in possession with the 'proceeds of crime';
   2. such 'proceeds of crime' are likely to be concealed, transferred, or dealt with any manner which may result in frustrating the proceedings related to confiscation of such 'proceeds of crime'.

Thus, the suspected proceeds of crime can be seized from the possession of any person irrespective of the fact whether the person has been indulged in any money laundering process or whether it was he who has or has not acquired the proceeds of crime.

In a petition it was stated that sec-5 of this Act is unconstitutional as it is violating the provisions of constitution.

Relevant Cases:
State of Gujarat v. Mirzapur Moti Kureshi Kassab Jamat, in this case the Supreme Court of India upheld the constitutional validity of certain provisions of the PMLA, such as the provision for the attachment and confiscation of properties involved in money laundering.

The Hon'ble Supreme Court held that section 5 is constitutionally valid and stated that:
"This provision provides a balancing arrangement to secure the interests of the person as also ensures that proceeds of crime remain available to be dealt with in the manner provided under the Act. The procedural safeguards as delineated are effective measures to protect the interests of persons concerned."

In another case, the Supreme Court of India also upheld the constitutional validity of certain provisions of the PMLA.

Nikesh Tarachand Shah v. Union of India, in this case the Supreme Court of India upheld the constitutionality of the PMLA, stating that it is not violative of the fundamental rights guaranteed under the Indian Constitution.

The court held that the PMLA is a reasonable restriction on the right to property, which is guaranteed under Article 300A of the Constitution, as it seeks to prevent the use of fraudulent wealth for unlawful activities.

Burden of proof:
When a person is accused of having committed the offence under section 3, the burden of proving that proceeds of crime are untrained property shall be on the accused.

In criminal cases it is on prosecution, so the section was challenged.

The Hon'ble Supreme Court held that section 24 of this Act has reasonable nexus with the purposes and objects sought to be achieved.

Statement by accused to ED (sec-50):
Section 50 empowers the investigating officer to summon and record the statements of persons concerned and also to make a note or inventory of such records or property.

The validity of sec-50 of PMLA was questioned in one of those petition, as it violates Article 20(3) of the Constitution which deals with rule against self-incrimination.

Supreme court held that:
"At the stage of issue of summons, the person cannot claim protection under Article 20(3) of the Constitution. However, if his/her statement is recorded after a formal arrest by the ED official, the consequences of Article 20(3) or sec-25 of the Evidence Act may come into play to urge that the same being in the nature of confession, shall not be proved against him."

Conclusion:
Therefore, by analyzing the aforementioned points it can be concluded that the Prevention of Money Laundering Act, 2002 or PMLA is constitutional under the Indian Constitution.

Written by: Arghya Mondal, B.B.A.LL.B(H), 2018-2023 - SOA National Institute of Law (Bhubaneswar, Odisha)