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Money Laundering and PMLA



  Apr 05, 2024

Money Laundering and PMLA



Illicit Funds: Money laundering is the process of concealing the true source of funds earned through illegal activities (such as drug trafficking, corruption, organized crime, or even tax evasion).

Layers of Complexity: Criminals use various techniques to disguise the origin of their money. This could involve moving it through a web of shell companies, investing in real estate, purchasing luxury goods, or using other financial instruments to blur the trail.

Purpose: The goal of money laundering is to integrate these illicit funds back into the legitimate economy, allowing criminals to enjoy their wealth and finance further illegal activities.

The Prevention of Money Laundering Act (PMLA)

India's Response: The PMLA was enacted in 2002 to combat money laundering and protect India's economic stability. It aligns with international efforts, particularly the Financial Action Task Force (FATF) recommendations.

Evolving Scope: The original focus of the PMLA was on preventing the laundering of money linked to drug trafficking. However, over time, numerous amendments have expanded the law's scope to include various other offenses.

Criticisms: This expansion is a major point of criticism. Opponents argue that the PMLA's current form is overly broad. It includes offenses that may not generate the vast sums of illicit money capable of truly destabilizing a national economy.

Key Concerns with the PMLA

Presumption of Guilt: The PMLA challenges the traditional legal principle of "innocent until proven guilty." The accused must prove their assets were obtained legitimately, shifting the burden of proof in a way many consider unfair.

Difficult Bail Provisions: The PMLA's bail conditions are exceptionally strict. This means those accused under the law often face lengthy pretrial detentions, even for offenses that might be considered relatively minor compared to the law's original intent.

Potential for Misuse: Critics fear that the PMLA's broad scope and harsh provisions could make it vulnerable to potential misuse for political or other motives.


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