India will have to make money laundering an explicitly standalone offence to upgrade its compliance ahead of the on-site mutual evaluation by the Financial Action Task Force (FATF), which is due in November-December 2020.
Among the key recommendations of the FATF, an international body that sets global standards for fighting illicit finance, is that money laundering be made a standalone offence.
- Despite several amendments, the Prevention of Money Laundering Act (PMLA) remains a predicate-offence-oriented law.
- This means a case under the Act depends on the fate of cases pursued by primary agencies such as the CBI, the Income Tax Department or the police.
- The latest instances are the verdicts in the 2G spectrum and Aircel-Maxis cases by the CBI courts, in which the money laundering angle probed by the Enforcement Directorate fell apart.
About Enforcement Directorate :-
The Enforcement Directorate is empowered to investigate the financial aspects of those crimes, as defined under the other penal laws, which are listed in the PMLA schedule.
Karnataka case :-
- On the issue of attachment of assets, however, the Karnataka High Court, in a 2016 judgement, appreciated the agency’s stand that money laundering was a standalone offence in view of Sections 5 and 8 amended in 2013, read with the definition of ‘property’ in Section 2(1)(v) of the Act.
FATF Evaluation of India in 2010 :-
- The first FATF mutual evaluation of India was done in 2010 when the body expressed satisfaction with the measures taken by the country.
- Whereas, FATF highlighted, in its 256-page report, a number of lacunae in the then extant legislation, for which it suggested changes. After analysing PMLA provisions, the FATF recommended that “legal measures are taken to allow for confiscation of the money laundered as subject of the ML [money laundering] offence and which is not contingent on conviction for the predicate offence [stand-alone ML offence].”