Supreme Court Lawyer Abhimanyu Bhandari shares his opinion on Money Laundering Acts

25 November,2022 03:37 PM IST |  Mumbai  |  BrandMedia

In an interview with Midday, Supreme Court lawyer Abhimanyu Bhandari, who also happens to be an expert in handling money laundering cases, views that labelling pure civil disputes as money laundering or an economic offence cannot automatically give it such a status.

Curtailing people*s liberty is an exceptional power and must be used sparingly, he believes. He also stresses upon the need to introduce compounding measures as respite to people booked under PMLA offences that are outside the ambit of terror and drug activities.

1. Do you believe that over the years, PMLA has evolved for the worse and hence deviated from the original purpose from when it was framed?

I actually see things a little differently. The PMLA was initially brought in to counter proceeds of crime generated from drugs and terrorism offences. So, it should be restricted to drugs and terrorism offences only. According to me, there are enough remedies in law outside of PMLA to attach proceeds of crime from other economic offences. You don*t need the PMLA necessarily to do that. And, the reason I say this is because PMLA gives copious amount of discretion to the investigating agencies, which is sometimes overwhelming. Therefore, it is important that PMLA is only used in drugs and terrorism offences. If it goes beyond that then it starts interfering with a lot of other bonafide business transactions and ends up being over-punitive. Hence, instead of further widening its scope it should be reined in by a wee bit.

2. What is your prescription for the law to get back on track?

We should make PMLA offences, which are done in the areas outside of drug and terrorism offences, completely compoundable. In a FEMA offence, RBI has the power to compound and impose penalty. In the same manner, any money laundering allegation, for proceeds of crime that have been generated outside drug and terrorism offences, should be easily compoundable by paying a penalty. If this comes across as too progressive a measure for the lawmakers, the law should at least look at extending the compounding relief to those who have not committed any crime but are only accused in a money-laundering case. If you are an accused in the scheduled offence then maybe you should not go in for compounding. So, let*s say you did not actually rob the bank but the allegation against you was that you dealt with the gold which was robbed from the bank. In such a scenario, you should be able to compound it because you are not a participant in the robbery. You have only dealt with the proceeds of the crime inadvertently. If proceeds of crime have been generated from non-drug and terrorism offences and a person is not a party to the scheduled offences or other offences then he should be able to go and file compounding application just like in the way of FEMA offences.

3. Will the new amendments to the Act render it better? Will it become less draconian as perceived world over?

I don*t think that there are any new amendments but new amendments need to be brought in to temper the severity of the act. For example, proceeds of crime should be defined more strictly. The term "value thereof" should be defined so that the contours of "value thereof" one knows, which is a very big debatable issue. I feel amendments need to be brought in to define how you define proceeds of crime especially the term "value thereof". Another amendment that needs to be brought in is that the twin conditions should be taken out. Because money-laundering is only a seven-year offence. There is no reason why the twin condition should be in a seven-year offence. And the twin condition can come into force in case of the scheduled offence.

4. What is your opinion on enforcement agencies attaching mortgaged properties? How does it hinder the process of litigation?

I think mortgaged properties should not be attached as the edifice of our entire economy stands on the bedrock of secured lending. Secured lending is the backbone on which any modern economy is built and if you attach mortgaged properties, you really cause huge disruption in the banking industry. Hence, mortgaged properties should not be attached and treated as proceeds of crime.

5. What are the changes required to make the Act as acceptable as other money globally prevalent money laundering rules?

It should not have twin conditions for grant of bail. The twin condition should only be there where even in the scheduled offences there are twin conditions. Bonafide transactions for consideration should not be attached. So, anybody who has paid good consideration to buy a property even if the property was proceeds of crime should not be interfered with and attached. Especially, the mortgaged assets should not be attached. The term "value thereof" should be defined to say that value thereof means the equivalent value of assets only in the hands of the person accused, and not the rest of the family members of the accused. So, "value thereof" will only be applied to those who are the main accused persons of the scheduled offence. If they don*t have the gold with them, you can attach other assets of theirs. But you can*t attach assets which they have probably already given over to their family members in the past or their assets which are co-owned by other members of their family. These clarifications should be brought in.

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