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ED against plan to decriminalise PMLA provisions, says move will blunt its powers

New Delhi: The Directorate of Enforcement (ED) has opposed the move to decriminalise provisions in the Prevention of Money Laundering Act (PMLA), warning that this will curtail the agency’s powers and impede its working.

It has asked the finance ministry to exclude PMLA provisions from the broader effort to decriminalise offences for improving ease of doing business.

“There were six provisions under PMLA which were selected for decriminalisation… ED strongly opposed the move,” said a person aware of the matter.

The finance ministry is now reconsidering some of the changes, another official said.

Proposed amendments include changes to the key Section 4 of the PMLA, which provides for rigorous imprisonment for anyone involved in money laundering. It covers everyone directly or indirectly involved in such offences, and anyone who knowingly assists, is knowingly a party to, or is actually involved in any process or action connected to such activity.

The agency is said to have told the ministry that any tweak in significant sections will have an impact on the outcome of ongoing ED investigations and, thus, must be considered only after assessing this impact on cases where the charge-sheet has been filed. “Many proposals need more deliberation and will be taken only after more discussion and debate,” said the second official cited above.

Experts Suggest Relook
Finance minister Nirmala Sitharaman in 2020 mentioned the government’s intent to decriminalise the PMLA. “We do not want a law which is going to treat every business house with suspicion. That is not the intent of this government,” she had said.

Experts say many provisions, such as inclusion of the offence of conspiracy (Section 120B IPC) as a standalone predicate offence, should be re-evaluated.

“While it has been emphasised by the Supreme Court that money laundering is a harm separate from the predicate offence, justifying wide powers to the prosecution for the former, the current understanding of the definition of money laundering precludes a complete separation of the two,” said Alina Arora, partner, Shardul Amarchand Mangaldas and Co. “Consequently, any predicate offence in relation to which money laundering proceedings can be initiated must have a valid rationale justifying special treatment.”

The PMLA provisions under consideration are separate from what is being proposed under the Jan Vishwas (Amendment of Provisions) Bill, 2022, which was introduced by commerce and industry minister Piyush Goyal in December and aims to amend certain enactments for decriminalising and rationalising minor offences.

It proposes to amend 183 provisions in 42 laws that are administered by 19 ministries. The bill, introduced in the winter session of Parliament last month, has been referred to a 31-member joint committee of Parliament.

ED is mandated with the task of enforcing provisions of the Foreign Exchange Management Act (FEMA), the PMLA and the Fugitive Economic Offenders Act, 2018.

As of March 31, 2022, ED had recorded around 5,422 cases under PMLA and 400 people had been arrested, according to the agency’s data.

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