SC upholds validity of PMLA, says ECIR cannot be equated to FIR

The Prevention of Money Laundering Act’s (PMLA) constitutionality was upheld by the Supreme Court on Wednesday.

A bench of Justices AM Khanwilkar, Dinesh Maheshwari, and CT Ravikumar pronounced the judgment on a group of 241 petitions contesting the legality of the law.

The Court upheld the legality of Sections 3 (definition of money laundering), 5 (attachment of property), 8(4) [taking possession of attached property), 17 (search and seizure), 18 (search of persons), 19 (powers of arrest), 24 (reverse burden of proof), 44 (offences triable by special court), 45 (offences being cognizable and non-bailable).

The court further ruled that as the Enforcement Case Information Report (ECIR) is an internal document and cannot be equated to a First Information Report (FIR), its provision under PMLA proceedings is not required.

“Supply of ECIR to accused is not mandatory and only disclosure of reasons during an arrest is enough. Even the ED manual is not to be published since it is an internal document,” the Court held.

The Court deemed “completely baseless” the argument regarding the proportionality of punishment under the PMLA Act with regard to scheduled offences.

The Court did rule that a larger bench of seven judges, who are now hearing a similar case, must decide whether or not to adopt changes to the PMLA Act as a money bill in 2019. One of the most crucial issues before the bench was the relationship between the predicate offence and the PMLA’s money laundering offence.

The petitioners had questioned a number of legal provisions, including the broad authority granted to the ED for searches, seizures, and attachments, the requirement that the accused bear the burden of proof of their innocence, the admissibility of statements made to the ED as evidence, the onerous requirements for bail approval, and the effect of the predicate offence and its resolution on PMLA cases.

The Central Government had contended that the Section 3 offence of money laundering is a stand-alone offence as long as a predicate offence exists, regardless of whether the predicate offence has been found guilty or not.

Relevantly, the government maintained that money laundering is a continuous offence under Section 3 regardless of when the predicate offence is listed in Schedule.