The story so far: The Supreme Court has upheld several provisions of the Prevention of Money Laundering Act (PMLA) that deal with a wide range of issues, from what constitutes the main offence to the powers of the Enforcement Directorate (ED) and the procedure for conducting searches and seizures and effecting arrests. The manner in which the Act is being implemented has come in for much criticism in recent years, as several investigations have been opened against political functionaries opposed to the BJP. The court has given its thumbs up to what are considered ‘draconian’ provisions, rejecting strong challenges to their validity.
What is the verdict broadly based on?
Since the mid-1980s, there has been global concern over the proceeds of criminal activities such as drug-trafficking being ‘laundered’ or and used in financing terrorism. The UN Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances adopted in Vienna in 1988 (Vienna Convention) was the first treaty that called upon nations to adopt domestic laws to combat drug trafficking. As part of these laws, countries were asked to prohibit the conversion or transfer of property gained through dealing in narcotics to conceal its illicit origin. The Financial Action Task Force (FATF) was established in the G-7 Summit in Paris in 1989 in response to mounting concern over money-laundering. The Task Force made recommendations from time to time to strengthen laws on the subject. The UN Convention against Transnational Organized Crime of 2000 (Palermo Convention) also advocated legislative and other measures to combat organised crime, and specifically called for ‘criminalising the laundering of proceeds of crime’.
