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Arrest under the Prevention of Money Laundering (PMLA) Act of 2002

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Arrest under the Prevention of Money Laundering (PMLA) Act of 2002

The term ‘Money Laundering‘ refers to the transformation of financial gain of various crimes into legitimate assets and other financial assets. The Prevention of Money Laundering Act (PMLA) was enacted in the year 2002 to prevent Money Laundering and related unlawful activities and, to seize the proceeds of crime so that the crime rate can be restricted.

The sole ground of arrest under the Prevention of Money Laundering (PMLA) Act of 2002 is the involvement in the activity of Money Laundering by converting the incomes from Non-Scheduled Offences (offences not mentioned in the Act) and Scheduled Offences; some of the acts scheduled in PMLA are:-

  1. The Indian Penal Code 1860
  2. The Narcotics, Drugs and Psychotropic Substances Act, 1985
  3. The Arms Act, 1959
  4. The Prevention of Corruption Act, 1988
  5. The Securities and Exchange Board of India Act, 1992
  6. The Companies Act, 2013
  7. The Bonded Labour System (Abolition) Act, 1976

The procedure of arrest must comply with Section 19 of the Prevention of Money Laundering (PMLA) Act of 2002, which requires that : –
● Before the arrest, there must be a “reason to believe” based on “the material in possession” that the accused is “guilty” of Money Laundering and that “reason to believe” must be “recorded in writing”.
● The “ground of arrest” must be informed to the accused “as soon as may be”.
● The copy of the “order of arrest” along with the “material in possession” must be forwarded to the concerned authority in a sealed envelope.

The offences under the Act are Cognizable and Non-Bailable; the prescribed punishment is between three to seven years of rigorous imprisonment with a fine.

Five important Rights of the Person who is Arrested are-

  1. The accused must be informed about the grounds for such arrest.
  2. The ‘Reason to Believe’ must be recorded in Case File
  3. Presence of two or more witness during Search and Seizure
  4. The arrestee must not be detained for more than 24 hours, from the time of the arrest
  5. The detained person must be presented before a Magistrate or the Gazetted Officer within 24 hours from the time of arrest.

In Chhagan Chandrakant Bhujbal v. Union of India Criminal Writ Petition No. 3931 of 2016 the Hon’ble Bombay High Court held that it does not matter whether the offence was cognizable or non-cognizable since the power of arrest conferred under Section 19 of the PMLA was not restricted by such characterization and there is no requirement to obtain an arrest warrant before arresting a person.

Furthermore, the concerned authority cannot detain a person beyond 24 hours, must ensure the presence of 2 witnesses, prepare a list of things seized, and signed by the witnesses and forward the same to the Adjudicating Authority.

The Prevention of Money Laundering (PMLA) Act of 2002 also describes the procedure of Attachment of property connected; any property confiscated or frozen under this Act can be retained for 180 days. This period can be extended by the Competent Authority after being satisfied with the merits of the case. The competent Court having the jurisdiction can subsequently order the release of such property.
Authored By: Adv. Anant Sharma & Chhatresh Kumar Sahu

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