The Prevention of Money Laundering Act, 2002 (PMLA) came into force with effect from 1st July, 2005. The Act was amended several times. Let us see the important amendments made in Section- 5 of PMLA.
Sec-5 – Attachment of property involved in money-laundering. —
(1) Where the Director, or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that—
(a) any person is in possession of any proceeds of crime;
(b) such person has been charged of having committed a scheduled offence; and
(c) such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and fifty days] from the date of the order, in the manner provided in the Second Schedule to the Income-tax Act, 1961 (43 of 1961) and the Director or the other officer so authorised by him, as the case may be, shall be deemed to be an officer under sub-rule (e) of rule 1 of that Schedule:
PROVIDED that no such order of attachment shall be made unless, in relation to the scheduled offence, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974), or a complaint has been filed by a person, authorised to investigate the offence mentioned in the Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be:
PROVIDED FURTHER that, notwithstanding anything contained in clause (b), any property of any person may be attached under this section if the Director or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section has reason to believe (the reasons for such belief to be recorded in writing), on the basis of material in his possession, that if such property involved in money-laundering is not attached immediately under this Chapter, the non-attachment of the property is likely to frustrate any proceeding under this Act.
(2) The Director, or any other officer not below the rank of Deputy Director, shall, immediately after attachment under sub-section (1), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority, in a sealed envelope, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period as may be prescribed.
(3) Every order of attachment made under sub-section (1) shall cease to have effect after the expiry of the period specified in that sub-section or on the date of an order made under sub-section (2) of section 8, whichever is earlier.
(4) Nothing in this section shall prevent the person interested in the enjoyment of the immovable property attached under sub-section (1) from such enjoyment. Explanation. — For the purposes of this sub-section “person interested”, in relation to any immovable property, includes all persons claiming or entitled to claim any interest in the property.
(5) The Director or any other officer who provisionally attaches any property under sub-section (1) shall, within a period of thirty days from such attachment, file a complaint stating the facts of such attachment before the Adjudicating Authority.
(i) Paragraph 1 of Part A and Part B of the Schedule, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974); or
(ii) Paragraph 2 of Part A of the Schedule, a police report or a complaint has been filed for taking cognizance of an offence by the Special Court constituted under sub-section (1) of section 36 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985).”.
The above definition was amended in 2013 vide PMLA (Amendment act) 2012 (2 of 2013) w.e.f 08.02.2013 by substituting and inserting the following words:
- Instead of “him” in 5, sub section (1) the word “the Director” was inserted.
- In 5, sub section (1) sub-clause (a) the word “and” was inserted.
- In 5 sub section (1) sub clause (b) the sentence “such person has been charged of having committed a scheduled offence; and” has been replaced by Sec.5 sub section (1) sub clause (c)
- In 5, sub section (1) sub-clause (c) now read as sub-clause (b), also got amended by substituting the following words “[one hundred and fifty days] from the date of the order, in the manner provided in the Second Schedule to the Income-tax Act, 1961 (43 of 1961) and the Director or the other officer so authorised by him, as the case may be, shall be deemed to be an officer under sub-rule (e) of rule 1 of that Schedule:” as “ one hundred and eighty days from the date of the order, in such manner as may be prescribed :
- Further in the first Proviso of 5 sub section (1) sub-clause (c) now amended as sub-clause (b), some words have been inserted at the end of the paragraph as “or a similar report or complaint has been made or filed under the corresponding law of any other country”
The above definition was again amended in 2015 vide Finance Act, 2015 w.e.f 14.05.2015 by substituting the following words:
In the second proviso, of Sec.5 sub-section (1) sub-clause (b) instead of the words “clause (b)” the words “first proviso” was substituted.
The above definition was again amended in 2018 vide Finance Act, 2018 w.e.f 19.04.2018 by inserting the following proviso in sub-section (1), after the second proviso,
“Provided also that for the purposes of computing the period of one hundred and eighty days, the period during which the proceedings under this section is stayed by the High Court, shall be excluded and a further period not exceeding thirty days from the date of order of vacation of such stay order shall be counted.’’
In the above definition another amendment has also made vide Finance Act, 2018 w.e.f 19.04.2018 by substituting the following words:
In sub-section (3), for the word, brackets and figure ‘‘sub-section (2)”, the word, brackets and figure “sub-section (3)” was inserted.
This section deals with attachment of property. The main ingredient of this section is “reasons to believe” to be recorded by the Deputy Director in writing on the basis of the materials in possession and it plays an important role in the attachment of properties. There are various judgments which interpret the “Reasons to believe”.
Before the 2013 amendment, the attachment of property involved in money laundering could take place only if a person has been charged of having committed a scheduled offence. After this amendment, the Enforcement Directorate can provisionally attach any property in possession of any person even if the said person is not alleged to have committed the Scheduled Offence, directly or indirectly.
This section provides for provisionally attaching such properties for a period not exceeding 180 days from the date of order. During 2018 amendment, proviso has been inserted to exclude the period of stay granted by a Court from 180-day limit for the validity of provisional attachment orders and also to provide a further period of not more than 30 days to take care of delays in communication of judicial orders. Earlier, the ED had to seek a waiver.
Under this section, after the provisional attachment of property, Enforcement Directorate has to file complaint before Adjudicating Authority within 30 days.
Through these amendments, the Enforcement Directorate has possessed extraordinary powers to attach the properties of persons who have committed the Scheduled offence.
SRI LAW ASSOCIATES
Disclaimer: Posting on this blog is for information purpose only and it’s not a legal advice.