Money Laundering – Issues & Tackling Measures
1. Context
- Finance Minister’s report in Rajya Sabha:
- 8,582 cases taken up by Enforcement Directorate (ED) under PMLA 2002 since 2015.
- Only 5 convictions so far → conviction-to-case ratio unsatisfactory.
- Rising number of cases signals government’s inability to check financial crimes
2. Definition
- As per Section 3, PMLA: Money laundering = processes/activities connected to proceeds of crime being concealed, possessed, acquired, used, or projected as untainted property.
3. Stages of Money Laundering
- Placement – Introducing illicit money into the financial system (e.g., smuggling cash into bank deposits).
- Layering – Complex transactions to hide source (e.g., investments, tax havens).
- Integration – Reintroducing funds into economy as apparently legitimate assets.
4. Concerns with Current Framework
- Rising number of cases questions the efficacy of PMLA implementation.
- Allegations of political misuse by targeting opponents.
- Supreme Court observations:
- In Vijay Madanlal Choudhary v. Union of India (2022): Scheduled offence essential; property attachment doesn’t require pre-registered criminal case.
- In Sharad Sippy v. ED (2019): ECR is sufficient to initiate proceedings.
5. Link with Global Commitments
- PMLA aligns with UN Political Declaration & Global Programme of Action (1990) to prevent money laundering.
- India has signed Double Taxation Avoidance Agreements (DTAA) with ~85 countries to exchange tax & banking information.
Way Forward
- Follow FATF recommendations for robust AML (Anti-Money Laundering) framework.
- Distinguish genuine cases from politically motivated ones.
- Strengthen international cooperation via DTAA and information sharing.
- Ensure legal provisions are not misused and cases are prosecuted promptly.
- Promote institutional capacity building for financial intelligence & enforcement.