Is money laundering a heinous crime, but isn’t the PMLA a “criminal” law in India?

Isn’t the PMLA a criminal law?

It is therefore not surprising that a similar fate met the petitions challenging various clauses of the PMLA, in the July 27 judgment handed down by a three-judge panel of the Supreme Court of India. To analyze the 545 pages of Vijay Madanlal Choudhary & Ors. v. Union of India & Gold. on an opinion piece is nearly impossible. Instead, this article explores what I would say is the Court’s most critical finding – is the PMLA criminal law? This logic is what had been at the heart of previous judicial encounters with socio-economic crimes under various statutes, with the Supreme Court ruling that these statutes were not criminal statutes and therefore procedural safeguards normally associated with criminal law need not be fully applied. in these contexts. Vijay Madanlal Choudhary followed this approach. Even as it tells us that money laundering, whether big or small, is as heinous a crime as terrorism, the Supreme Court ruled that the PMLA was not a criminal law but a ‘sui generis’ right. By considering the law through this prism, he justified, directly and indirectly, the dilution of ordinary procedural guarantees applicable in criminal law to the investigative process.

Let us first specify that this logic of differentiation itself deserves to be seriously questioned. The only way the Supreme Court has justified inferior procedural safeguards for the investigative and investigative process under these laws is to try to uncover the purpose of the law and examine how the process ends. Take the law on customs, it is a law which aims to fix customs duties, to provide a system for its application and to sanction fraud; it uses criminal sanctions only for one aspect and is therefore not a criminal law. Furthermore, as it is possible under the Customs Act for an investigation to end only in the imposition of a fine and not in a prosecution, the process leading to this point cannot be considered s resembling a criminal law. The inherent problem with this consequentialist approach is that it very clearly puts the cart before the horse: safeguards only matter when an investigation is underway, and tying their application to the outcome renders them ineffective.

Nevertheless, since this flawed logic is the law as it stands, we have to ask ourselves if the PMLA meets this threshold. The PMLA does not impose taxes or duties. Yes, the PMLA permits the seizure and forfeiture of property and imposes disclosure obligations on individuals, but unlike the Customs Act and other statutes where issues have been considered by the courts in the past , all of these civil proceedings the PMLA does not operate independently of criminal prosecutions. The offense is at the heart of the law. Further, regardless of the extent of the alleged indiscretion, the option that exists with a Fiscal Intelligence Branch officer to end the customs case with a fine does not exist for IRS officers. of the application acting under the PMLA. A seizure can begin before prosecution, but the action cannot be completed by forfeiture of the property until a person has been convicted of the money laundering offence.