The illegal process of concealing the origins of money obtained illegally by passing it through a complex sequence of banking transfers or commercial transaction is known as money laundering. Money laundering, a criminal offence, is a serious threat to our society as they cause financial repercussion to any country. In India, the Prevention of Money Laundering Act, 2002 provides provisions for the violator who involves themself in illegal activities. The article is about right to bail in money laundering cases.
By: Syed Suhaiba Geelani, 4th Year, BALLB, University of Kashmir.
Introduction:
There is no specific definition of money laundering. It is wide enough to cover many domains of illegal activities of a country. Money laundering is the illegal process of making large amounts of money generated by criminal activity, such as drug trafficking or terrorist funding, appear to have come from a legitimate source. The money from criminal activity is considered dirty, and the process “launders” it to make it look clean. Money laundering is a serious financial crime that is employed by white-collar and street-level criminals alike. The overall scheme of this process returns the “clean” money to the launderer in an obscure and indirect way.
Banks play an important role in preventing money laundering. If they doubt a large amount of sum which is transferred or withdrawn, they have to report such acts under Section 35A of the Banking Regulation Act, 1949 and also under the Prevention of Money Laundering Rules, 2005.
Regarding the punishment related to money laundering, a person or an organization are to be held liable as per Section 3 of the PMLA, 2002. This section makes any directly or indirectly involved party guilty. And those who are proved of being involved in money laundering will be punished as per Section 4 of the PMLA, 2002.
The punishment for money laundering is that the guilty individual or organization will be awarded a minimum of 3 years of imprisonment which can extend up to 7 years along with a fine of rupees 5 lakh.
As per Section 24 of the Prevention of Money Laundering (Amendment) Act, 2012 the one who is involved with the offense of money laundering, is guilty unless proven innocent.
Bail under PMLA:
In the cases where a person is filled with the offense of money laundering, Section 45 in The Prevention of Money-Laundering Act, 2002 Offences to be cognizable and non-bailable. Section 45 of the Prevention of Money Laundering Act, 2002 deals with the provision of bail in that situation. The offense of money laundering is administered as a cognizable and non-bailable offense, so bail in this circumstance can only be awarded if anyone is charged with imprisonment of fewer than 3 years. Those who are charged with punishment of more than 3 years have to file for a bail bond, and then the court awards bail to them after having assurance from them in monetary terms that they will appear in the court whenever there are trials of their case.
Nikesh Tarachand Shah vs. Union of India & Anr
In this case, the court had struck down Section 45(1) of the Prevention of Money Laundering Act, 2002 (hereinafter also referred as “PMLA”), insofar as it imposes two further conditions for release on bail, for the offences punishable for a term of imprisonment of more than 3 years under Part A of the Schedule to the PMLA is involved, to be unconstitutional as it is violative of the fundamental rights.
The 2 conditions provided under the said section are as under:
1. The Public Prosecutor has been allowed to oppose the application for such release; and
2. Where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail.
Following this judgment, the Government of India with effect from 19-04-2018 has amended Section 45(1) of the PMLA Act by adding the words “under this Act” to Sub-section (1) of Section 45 of the PMLA Act and deleting the words “punishable for a term of imprisonment of more than 3 years under Part A of the Schedule”, as one of the grounds for striking down the section in the said judgment was that the appropriate Court while deciding the bail application should have reasonable grounds for believing that the accused is not guilty of a predicate offense instead of an offense under PMLA.
The amended section 45 of the PMLA reads as under:
Section 45 – Offences to be cognizable and non-bailable
Notwithstanding anything contained in the Code of Criminal Procedure, 1973(2 of1974), no person accused of an offense [under this Act] shall be released on bail or his bond unless
(i) the Public Prosecutor has been allowed to oppose the application for such release; and
(ii) where the Public Prosecutor opposes the application, the court is satisfied that there are reasonable grounds for believing that he is not guilty of such offence and that he is not likely to commit any offence while on bail:
Provided that a person, who, is under the age of sixteen years, or is a woman or is sick and infirm [or is accused either on his own or along with other co-accused of money-laundering a sum of less than one crore rupees], may be released on bail, if the Special Court so directs:
Provided further that the Special Court shall not take cognizance of any offense punishable under section 4 except upon a complaint in writing made by—
(i) the Director; or
(ii) any officer of the Central Government or a State Government authorized in writing in this behalf by the Central Government by a general or special order made in this behalf by that Government.
(1A) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, or any other provision of this Act, no police officer shall investigate into an offense under this Act unless specifically authorized, by the Central Government by a general or special order, and, subject to such conditions as may be prescribed’
(2) The limitation on granting of bail specified in [***] sub-section (1) is in addition to the limitations under the Code of Criminal Procedure, 1973 (2 of 1974) or any other law for the time being in force on granting of bail.
Nikesh Tarachand Shah vs Union of India (2017)
Regard being had to the above, we declare Section 45(1) of the Prevention of Money Laundering Act, 2002, insofar as it imposes two further conditions for release on bail, to be unconstitutional as it violates Articles 14 and 21 of the Constitution of India.
All the matters before us in which bail has been denied, because of the presence of the twin conditions contained in Section 45, will now go back to the respective Courts which denied bail. All such orders are set
aside, and the cases remanded to the respective Courts to be heard on merits, without application of the twin conditions contained in Section 45 of the 2002 Act. Considering that persons are languishing in jail and that personal liberty is involved, all these matters are to be taken up at the earliest by the respective Courts for fresh decision.
Awarding bail to the accused, who is involved in a money laundering case, is found to be violative. as we know that a person is innocent until proven guilty, but here those who are filled under this offense, they are pronounced guilty and even before being declared guilty by the court they are being treated as criminal and because of which their fundamental right i.e., to be treated equally and right to life is violated under Article 14 and Article 21 of the Constitution of India, as the court followed twin test.
Conclusion:
The threat of money laundering is still encountered in India and to restrain and stop it, the government has proposed different rigorous laws and punishments. Prevention of Money Laundering Act has encountered meaningful changes since its commencement. But various High Courts across the country still have decided the position that mere replacement of the word ‘under this Act’ will neither revive nor resurrect the application of twin conditions, which has been pronounced unconstitutional as a whole by the Supreme Court.
