PMLA & ED
Overview
Every money-laundering case rests on a 'scheduled' or predicate offence, such as cheating, corruption or forgery, usually investigated by another agency. Defending a PMLA matter therefore means understanding the predicate case as thoroughly as the money-laundering allegation, and handling the two consistently.
We advise individuals, directors and businesses from the first summons through attachment proceedings, bail, trial and appeal. We also advise organisations that are reporting entities under the Act on meeting their obligations, so that problems are less likely to arise in the first place.
Scope
Advice and preparation before an appearance in response to a summons under Section 50, covering the documents to be produced and the record of statements made.
Advice during and after searches, scrutiny of seizure and arrest procedure, including the requirement that the grounds of arrest be given in writing, and representation at remand hearings.
Bail applications before the Special Court, the High Court and the Supreme Court, addressing the twin conditions in Section 45 and the circumstances in which courts have granted bail notwithstanding them.
Responding to provisional attachment orders under Section 5 and contesting their confirmation before the Adjudicating Authority, including claims by owners and occupants who are not accused.
Appeals to the Appellate Tribunal against orders of the Adjudicating Authority, and further appeals to the High Court on questions of law or fact arising from the Tribunal's orders.
Defence in the underlying scheduled offence, including quashing, discharge and trial, since the outcome there can decide whether the money-laundering case survives.
Defence of prosecution complaints, including the hearing before cognizance now available under the BNSS, arguments on charge, and trial.
Advice to banks, intermediaries, real estate businesses, dealers in precious metals and stones and other reporting entities on record-keeping, client due diligence, beneficial-ownership checks and reporting to FIU-IND.
Approach
We review the summons, any FIR or complaint in the predicate case and the client's records before any appearance, so that statements are made with a full understanding of the issues.
We identify every connected proceeding, whether the predicate case, the ED investigation, attachment, or tax and regulatory matters, and plan them together, avoiding positions in one forum that harm the client in another.
Where arrest or attachment is a risk, we prepare the appropriate applications and assemble documentary evidence of the legitimate sources of funds and assets.
We contest attachment before the Adjudicating Authority and the Appellate Tribunal, and the prosecution before the Special Court, through to appeal where necessary.
Questions
A summons under Section 50 of the PMLA requires you to attend, give evidence and produce documents. It may be issued to a witness as well as to a person under investigation, so a summons does not by itself mean that you are an accused. The obligation to attend and to state the truth is a legal one, and non-compliance has consequences. Before appearing, review the documents asked for, organise your records and take advice on the issues likely to arise. There is no general right to have a lawyer present while a statement is recorded, although courts have on occasion permitted counsel to remain within sight but out of hearing.
Yes. Provisional attachment under Section 5 is directed at property believed to be 'proceeds of crime', and it can reach such property in the hands of any person, not only an accused. The order lasts for up to 180 days and must be confirmed by the Adjudicating Authority, which issues notice and hears the persons concerned. That hearing is the opportunity to show, with documents, that the property was acquired from legitimate sources or is otherwise not proceeds of crime. An order confirming attachment can be appealed to the Appellate Tribunal.
The Supreme Court has held that the offence of money-laundering depends on the existence of a scheduled offence. If a person is finally discharged or acquitted of the scheduled offence, or the criminal case against them for it is quashed, there can be no action for money-laundering against that person, or anyone claiming through them, in relation to property linked to that offence. This is one reason the defence of the predicate case is central to any PMLA strategy.
Section 45 requires that the Public Prosecutor be given an opportunity to oppose a bail application and, where it is opposed, that the court be satisfied there are reasonable grounds for believing the accused is not guilty and is not likely to commit an offence while on bail. The Act allows the Special Court to release on bail, without those conditions, a person under sixteen, a woman, a person who is sick or infirm, or a person accused of laundering a sum of less than one crore rupees. The Supreme Court has also held that prolonged detention, with no reasonable prospect of the trial concluding, can justify bail notwithstanding Section 45, because statutory restrictions on bail must yield to the constitutional rights to personal liberty and a speedy trial.
The complaint is filed before the Special Court. Where it is filed after the BNSS came into force on 1 July 2024, the Supreme Court has held that the accused must be given an opportunity of being heard before the court takes cognizance, which is an important early chance to answer the complaint. The Supreme Court has also held that a person who was not arrested during the investigation and appears before the Special Court in response to its summons cannot be treated as being in custody; if the ED then wishes to take that person into custody, it must apply to the Special Court.
Banks, financial institutions and intermediaries, and persons carrying on certain designated businesses or professions, such as real estate agents and dealers in precious metals and stones, have obligations under Section 12 of the PMLA. These include verifying the identity of clients and their beneficial owners, maintaining records of specified transactions, and furnishing information to the Financial Intelligence Unit – India within the prescribed time. The categories of entities covered have been widened by notifications in recent years, so it is worth confirming whether, and how, the obligations apply to your business.
Insights
What a summons under Section 50 of the Prevention of Money-laundering Act means, the safeguards around arrest after Vijay Madanlal Choudhary (2022) and Pankaj Bansal (2023), and how provisional attachment and adjudication work.
More than two years after three new statutes replaced the IPC, the CrPC and the Evidence Act, a practical guide to what has changed for complainants, accused persons and witnesses.
A consultation of about an hour with an advocate of the firm, to understand your position and the options open to you. Fees are discussed and agreed beforehand.
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