๐ May 9, 2025, Post 2: Justice Revisited: Supreme Court Reopens Debate on Money Laundering Law | Mains Essay / Target IAS-26 MCQs Attached: A complete Package, Dear Aspirants!
Justice Revisited: Supreme Court Reopens Debate on Money Laundering Law
NEWS DROP โ PETAL 002
๐๏ธ Date: May 9, 2025
โ๏ธ Thematic Focus: GS2 โ Judiciary | Polity | Fundamental Rights
๐ฟ Intro Whisper:
When power expands too far, justice must return to its rootsโasking again, not what is legal, but what is right.
๐ Key Highlights:
- Whatโs in News:
The Supreme Court of India has initiated a review of its 2022 judgment upholding the wide powers of the Directorate of Enforcement (ED) under the Prevention of Money Laundering Act (PMLA), 2002.
๐๏ธ About the PMLA, 2002
- Enforced since July 1, 2005
- Aims to prevent money laundering, confiscate criminal proceeds, and align India with FATF standards
- Implemented by the Directorate of Enforcement (ED)
Key Provisions:
- Criminalization: Hides, converts, acquires, or uses money derived from illegal activities.
- Investigation & Seizure: ED can attach, freeze, and confiscate assets during investigation.
- Financial Sector Obligations: Banks and intermediaries must maintain KYC, transaction logs, and report suspicious activity.
- Judicial Setup: Establishes Special Courts, appeals to Appellate Tribunal and High Courts
โ๏ธ Why the 2022 Ruling Was Controversial
- Access to ECIR:
โค ECIR = Enforcementโs version of an FIR
โค In 2022, SC upheld EDโs power to withhold ECIR from accused
โค Critics say this violates natural justice and the right to legal defence
โค A recent ruling contradicted this, prompting judicial review - Burden of Proof:
โค Under PMLA, accused must prove innocence
โค Goes against criminal law principle: โInnocent until proven guiltyโ
โค SC may now re-evaluate this reverse burden clause - Expanding Scope:
โค Broadening of “predicate offenses” via amendments
โค Increases risk of overreach and arbitrary targeting
โค Impacts compliance burden across industries
โ ๏ธ Constitutional Questions Raised
- Article 21 โ Right to Fair Trial
- Article 14 โ Right to Equality before Law
- Article 22 โ Protection against arbitrary arrest
- Due process violations under non-disclosure of ECIR and reverse burden
๐ GS Paper Mapping:
- GS Paper 2: Judiciary | Executive Accountability | Rights of the Accused
- GS Paper 3: Internal Security | Financial Regulation
- Essay: โLaws That Protect or Persecute? PMLA and the Ethics of Financial Surveillanceโ
๐ Closing Thought:
A strong law must not only catch the guiltyโit must also protect the innocent. For when liberty is lost in procedure, justice becomes a shadow of power.
Target IAS-26: Daily MCQs :
๐ Prelims Practice MCQs
Topic:
MCQ 1: Type-1 โ โHow many of the above statements are correct?โ
Consider the following statements regarding the Prevention of Money Laundering Act (PMLA), 2002:
1. The PMLA empowers the Directorate of Enforcement (ED) to investigate and prosecute money laundering cases.
2. Under PMLA, financial institutions are required to report suspicious transactions and verify client identities.
3. The burden of proof in PMLA cases lies with the prosecution, as in other criminal cases.
4. The Supreme Court is reviewing the 2022 ruling that allowed ED to withhold the ECIR from the accused.
How many of the above statements are correct?
A) Only two
B) Only three
C) All four
D) Only one
๐ Didnโt get it? Click here (โธ) for the Correct Answer & Explanation
โ Correct Answer: B) Only three
๐ง Explanation:
1) Correct โ ED is the principal enforcement agency under PMLA.
2) Correct โ Financial institutions have strict KYC and reporting obligations.
3) Incorrect โ Under PMLA, the burden shifts to the accused to prove innocence.
4) Correct โ The review concerns ECIR disclosure and due process rights.
MCQ 2: Type-2 โ Two-Statement Assertion
Consider the following statements:
The ECIR under PMLA is similar to an FIR but is not mandatorily shared with the accused.
A recent Supreme Court ruling held that withholding the ECIR violates constitutional rights.
A) Only 1 is correct
B) Only 2 is correct
C) Both are correct
D) Neither is correct
๐ Didnโt get it? Click here (โธ) for the Correct Answer & Explanation
โ Correct Answer: C) Both are correct
๐ง Explanation:
1) Correct โ The ECIR plays the role of an FIR in PMLA investigations but isnโt shared by default.
2) Correct โ A recent judgment challenged this, citing violations of fair trial rights.
MCQ 3: Type-3 โ โWhich of the above statements is/are correct?โ
Consider the following statements about PMLA and judicial concerns:
1. PMLA includes provisions for asset attachment and confiscation during investigations.
2. Special Courts are established to handle money laundering cases.
3. Expanding the list of predicate offences under PMLA has raised concerns about misuse.
4. The PMLA allows unlimited detention of the accused without trial.
Which of the above statements is/are correct?
A) 1, 2 and 3 only
B) 1, 3 and 4 only
C) 2 and 4 only
D) All four
๐ Didnโt get it? Click here (โธ) for the Correct Answer & Explanation
โ Correct Answer: A) 1, 2 and 3 only
๐ง Explanation:
1) Correct โ ED can freeze, attach, and seize assets.
2) Correct โ Dedicated Special Courts try offences under PMLA.
3) Correct โ Broader definitions now cover offences under many laws, raising flags.
4) Incorrect โ Detention is bound by judicial oversight and PMLA procedural rules.
MCQ 4: Type-4 โ Direct Factual Question
Which agency is primarily responsible for investigating offences under the Prevention of Money Laundering Act in India?
A) Central Bureau of Investigation (CBI)
B) Directorate of Enforcement (ED)
C) National Investigation Agency (NIA)
D) Central Vigilance Commission (CVC)
๐ Didnโt get it? Click here (โธ) for the Correct Answer & Explanation.
โ Correct Answer: B) Directorate of Enforcement (ED)
๐ง Explanation:
B) The ED is tasked with investigating and prosecuting offences under the PMLA, including asset seizure and prosecution.
