INTRODUCTION
Money laundering has been in the news in recent days as several renowned celebrities, YouTubers and politicians have been arrested and questioned for money laundering. Money Laundering can be considered a process by which criminals disguise the illicit origin of their property and try to make it appear from a lawful source.
Money laundering became a major concern. Governments around the world initiated several actions to combat it. The Prevention of Money Laundering Act (PMLA) was introduced in India as a measure to combat money laundering and associated financial crimes. The prime body responsible for enforcing PMLA is the Enforcement Directorate (ED).
Bail generally means the release of a prisoner in exchange for payment of some amount of money as security given by the prisoners for their appearance in court in the later stages of the trial. Provisions of bail vary depending on the Act and its implementations. Bail provisions of PMLA have been defined under section 45 and it imposes stringent bail conditions.
UNDERSTANDING PMLA
Article 3.1 of the UN Vienna Convention, 1988 describes money laundering as a process of conversion or transfer of property knowingly that it has been derived from a criminal offence and to obscure that illicit origin of the assets or to assist someone in doing so to evade or avoid the legal consequences. Money laundering typically follows three stages: converting and releasing illegal money in the legal and financial system. They are:
- Placement- it is the collection of funds to separate them from the direct association of crime
- Layering- it is the concealment of the trail of the money
- Integration- it makes the illegitimate money appear to be out of legitimate source
Money laundering became a backbone for drug trade and terrorist funding, which led to the establishment of the Financial Action Task Force (FATF), which is an intergovernmental body aimed at combating Money laundering. This has motivated countries like India to enact their specific money laundering laws. Prevention of Money Laundering Act or PMLA was enacted in 2002 as the core of the Indian legal structure to combat Money Laundering. PMLA imposes liability on financial entities, banking companies, intermediaries and persons who carry designated businesses and professions to verify their clients’ identities, maintain their records and furnish that information to FIU-IND. PMLA also enables the confiscation of possessions acquired through or associated with money laundering. PMLA 2002 has two aspects of offence: firstly, the scheduled or predicate offence and secondly, the independent offence of Money Laundering. To initiate a money laundering case, the occurrence of a scheduled offence is a must, but once the case is registered, PMLA can stand independent of the scheduled offence.
BAIL
The term Bail has been defined in Bharatiya Nyaya Suraksha Sanhita, 2023, as a legal process that can be defined as the temporary release of an accused or suspected in exchange for a bail bond and subject to the condition that they need to appear in court in later stages of the trial. Bail provisions in India are backed by Article 21, which is a fundamental right and advocates for the Right to Life and Personal liberty of every citizen. Granting of bail has been defined under sections 436-450 of CrPC, which is based on the nature and gravity of the offence. An offence can be classified as:
- Bailable- Presumed as less heinous, and punishment for the same is less severe, and in this case, the accused has a better chance of getting bail.
- Non-Bailable- it includes serious offences, and the accused cannot claim bail as a right but can approach the court for the same.
OVERVIEW OF PMLA BAIL PROVISIONS
Even though bail is essential for the realisation of liberty for the individual and supports the principle ‘bail is the rule and jail is an exception’, this doesn’t mean that Bail is an absolute Right. Depending on the nature and gravity of the offence, legislations like PMLA impose stringent conditions on granting bail. In P. Chidambaram v. Directorate of Enforcement, it was held that economic offences have a broad societal impact, so the courts need to scrutinise the matter and its gravity before granting bail, which upholds the significance of Section 45 of the act. Section 45 of the Prevention of Money Laundering Act defines rigorous bail conditions for the accused of offences under the act. It mentions that the court must be satisfied with the ‘Twin Conditions’ for granting Bail, which are: (i) there must be a reasonable ground for the court to believe the accused is not guilty of that offence, and (ii) the accused is not likely to commit any such offence or manipulate evidence. These dual conditions of obtaining bail under the act are more stringent than standard bail, which has been criticised for being a curtailment of the personal liberty of individuals.
Twin bail provisions under section 45 of PMLA were struck down in 2017 in the case of Nikesh Tarachand Shah v. Union of India, where the court reasoned that these bail provisions are in contradiction to Article 14 (Right to Equality) and Article 21 (Right to Life and Personal Liberty) of the Indian Constitution. However, these provisions were revived by the amendment in 2018. After the amendment, it was retained that public prosecutors must be given a proper opportunity to oppose the bail of the accused, and the court must be satisfied that the accused won’t commit the offence while on bail. Granting of bail also became subject to the gravity of the crime and the possibility of tempering of evidence by the accused. This has initiated a debate about prioritising the fundamental right of liberty or enacting stringent laws to combat money laundering.
NEED OF BALANCE
The stringent bail laws of PMLA don’t follow the principle of ordinary bail provision under criminal law, i.e., the presumption of an accused to be innocent until proven guilty as it considered accused to be guilty places the burden of proof on him to demonstrate that he is ‘not guilty’. Due to this, section 45 has always been a matter of debate as the presumption of innocence is a human right and an essential condition for the realisation of the right to life and liberty. However, this stringent bail provision is necessary to create a sense of fear among the individuals who are operating money laundering and related crimes, as it can affect the economy and society as a whole through economic distortion and financial instability; the social cost associated is the encouragement of crimes likes drug trafficking and smuggling.
There is a need to maintain a balance between shielding society from money laundering and safeguarding the rights and liberty of the individual. Judicial intervention has played a significant role in maintaining this balance and protecting the rights of individuals. In the case of Manish Sisodia v. Directorate of Enforcement, it was held by the Supreme Court that the Right to speedy trial and the Right to liberty of an individual must not be ignored. Similar vigilance of the apex court is needed to ensure a right to a free trial and fair applicability of the law.
CONCLUSION
Money laundering poses a significant concern to the economy and financial stability of any country and fosters illicit activities such as terrorism, drug trafficking and smuggling. Many intergovernmental organisations, such as FATF, have been set up to curb money laundering. India enacted the Prevention of Money Laundering Act as a robust framework to curb this menace. However, section 45 of the act talks about ‘twin conditions’, which impose stringent conditions on bail. This act is also against the principle of ‘presumption of innocence until proven guilty’ and shifts the burden of proof on the accused. This act lays stringent bail provisions to prevent misuse and create a sense of fear to curb money laundering. Nevertheless, these conditions set a high threshold for bail and are argued as a restriction on the fair enjoyment of the Right to life and personal liberty. Judicial intervention has tried to maintain a balance between ensuring the security of citizens and protecting the rights of individuals. However, along with balance, continued judicial vigilance, fair trial, and legislative reform are necessary to ensure this fight against money laundering does not compromise the rights of any individual.
Author(s) Name: Tannu Shree (Maharashtra National Law University, Aurangabad
