The Enforcement Directorate (ED) has arrested Delhi Chief Minister Arvind Kejriwal in connection with a money laundering case related to the Delhi Liquor scam. The ED has apprehended Kejriwal under the Prevention of Money Laundering Act (PMLA). But what does the Enforcement Directorate do under this law, from investigation to arrests and seizures?
Money laundering, or the process of converting illegally obtained funds into legitimate ones, is essential to grasp before understanding the Prevention of Money Laundering Act (PMLA). Money laundering involves disguising illicitly earned money as legitimate income, making it difficult for investigating agencies to trace the primary source of the funds. Individuals engaged in such activities are commonly referred to as “launderers.”
The PMLA, enacted in 2002 and implemented in 2005, aims to combat the process of converting black money into white. Its primary objectives include preventing money laundering cases, curbing the use of illicit funds in unlawful activities and economic offenses, confiscating assets involved in money laundering, and preventing other related offenses.
The process of money laundering is divided into three stages: placement, layering, and integration. The first stage involves introducing cash into the financial system, typically through formal or informal financial institutions. The second stage, layering, entails concealing the source of funds through accounting manipulation and other suspicious transactions. The launderer often invests the illicit funds in assets like bonds, stocks, or real estate or deposits them in overseas bank accounts, frequently in countries not cooperating with anti-money laundering campaigns. Integration, the final stage, involves reintroducing the laundered money into the economy as legitimate wealth. This laundered money often returns through investments in companies, purchasing of real estate, or buying luxury items.
Under the PMLA, various offenses are categorized in schedules A, B, and C. Schedule A includes offenses under the Indian Penal Code, Prevention of Corruption Act, Narcotic Drugs and Psychotropic Substances Act, Antiquities and Art Treasures Act, Trademark Act, Wildlife Protection Act, Copyright Act, and Information Technology Act. Schedule B encompasses all offenses mentioned in Schedule A but involving amounts exceeding one crore rupees. Schedule C includes transnational crimes or terrorist activities.
The PMLA provides for various actions against those found guilty of money laundering. This includes the confiscation of proceeds of crime and records, among other penalties. Additionally, for offenses related to money laundering (the process of converting black money into white), the Act prescribes a minimum of 3 years of rigorous imprisonment, extendable up to 7 years, along with fines. If offenses under the Narcotic Drugs and Psychotropic Substances Act, 1985 are also involved, the Act allows for sentences of up to 10 years along with fines.
In conclusion, the Prevention of Money Laundering Act is a crucial tool in combating financial crimes, ensuring that illegal funds are not integrated into the legitimate economy. The recent arrest of Arvind Kejriwal under this act underscores its significance in tackling corruption and illicit financial activities.
