Addressing Money Laundering: International Initiatives and Challenges in India's PMLA
GS PAPER 2 & 3
- International Concern over Drug Trafficking:
- The United Nations highlighted the severity of the issue in 1988, prompting the adoption of the United Nations Convention against Illicit Traffic in Narcotic Drugs and Psychotropic Substances.
- The convention urged all nations to take immediate action to prevent the laundering of proceeds from drug crimes and related activities.
- Establishment of Financial Action Task Force (FATF):
- In response to the growing concern, seven major industrial nations convened in Paris in July 1989 to form the FATF.
- The FATF's objective was to address the issue of money laundering and propose strategies to combat it.
- UN General Assembly Resolution (1990):
- Following the FATF's establishment, the United Nations General Assembly adopted a resolution known as the Political Declaration and Global Programme of Action in 1990.
- This resolution urged member countries to enact appropriate legislation to effectively prevent the laundering of drug money.
- Special Session on World Drug Problem (1998):
- Recognizing the transnational nature of drug trafficking, the UN convened a special session on June 10, 1998.
- During this session, a declaration was made emphasizing the urgent need to combat money laundering associated with drug trafficking.
- Enactment of the Prevention of Money Laundering Act, 2002:
- India, in alignment with the recommendations of the FATF and the resolutions of the UN, formulated the Prevention of Money Laundering Act in 2002.
- The Act aimed to prevent the integration of black money generated through drug trafficking into the legitimate economy, thereby addressing the threat it posed to the economy and sovereignty of nations.
- Basis of Enactment:
- The PMLA was enacted by India's Parliament under Article 253, which empowers it to make laws for implementing international conventions.
- Article 253 restricts the scope of such laws to the subject matter of the international decision.
- Original Scheme Deviation:
- Amendments to the PMLA expanded its schedule to include offenses beyond drug trafficking, deviating from its original purpose.
- The schedule now contains offenses that are already covered by the Indian Penal Code (IPC) or other specialized laws.
- Draconian Provisions:
- The provisions within the PMLA, initially designed to combat drug trafficking, are now applied to a broader range of offenses without mitigating their severity.
- The law's harshness remains unchanged, even when applied to offenses that do not pose a significant threat to the economy or national sovereignty.
- Example: Prevention of Corruption Act, 1988:
- The Prevention of Corruption Act, aimed at curbing corruption among public servants, was added to the schedule of offenses in 2009.
- Consequently, public servants charged with corruption face the same rigorous treatment under the PMLA as hardcore drug traffickers.
- Presumption of Guilt:
- The PMLA reverses the fundamental principle of Anglo-Saxon jurisprudence, where individuals are presumed innocent until proven guilty.
- Section 45 of the PMLA denies bail unless the judge is convinced of the accused's innocence, effectively presuming guilt until proven otherwise.
- This provision leads to prolonged detention without trial, as judges are hesitant to grant bail under such stringent conditions.