What is PMLA?

The Prevention of Money Laundering Act (PMLA), 2002 is India's principal legislation to combat money laundering and provide for the confiscation of property derived from or involved in money laundering. It was enacted on 17 January 2003 and came into force on 1 July 2005. The Act is administered by the Department of Revenue, Ministry of Finance, and enforced by the Enforcement Directorate (ED).

PMLA defines money laundering as the process of directly or indirectly attempting to indulge in, or knowingly assisting, or being a party to any activity connected with the proceeds of crime. The Act covers offences listed in its Schedule (known as "scheduled offences"), which includes crimes under the IPC/BNS, NDPS Act, Prevention of Corruption Act, UAPA, and several other statutes.

The 2019 amendment (via Finance Act) made money laundering a continuous offence — a person is liable to prosecution as long as they are enjoying the proceeds of crime. In the landmark Vijay Madanlal Choudhary v. Union of India (2022), the Supreme Court upheld the constitutional validity of PMLA, including ED's powers of arrest, search, seizure, attachment, the reverse burden of proof (Section 24), and twin conditions for bail (Section 45).

Key Features

# Feature Details
1 Enacted 17 January 2003; enforced from 1 July 2005
2 Enforcement Agency Directorate of Enforcement (ED), Ministry of Finance
3 Scheduled Offences Crimes listed in the PMLA Schedule — IPC/BNS, NDPS, UAPA, Prevention of Corruption Act, etc.
4 Provisional Attachment ED can attach property involved in money laundering for 180 days (Section 5)
5 Adjudicating Authority Confirms or releases attached property; appeals go to Appellate Tribunal, then High Court
6 Reverse Burden of Proof Section 24 — accused must prove that proceeds of crime are untainted
7 Bail Conditions Section 45 — twin conditions: prosecutor must be heard; court must be satisfied the accused is not guilty and will not commit further offences
8 Continuous Offence 2019 amendment — offence continues as long as accused enjoys proceeds of crime
9 FIU-IND Financial Intelligence Unit receives suspicious transaction reports from banks and financial institutions

Current Status / Latest Data

  • In Vijay Madanlal Choudhary v. UoI (2022), the Supreme Court upheld PMLA's constitutionality, including ED's sweeping powers and reverse burden of proof.
  • 2023 amendments defined Politically Exposed Persons (PEPs) — currently covers only foreign PEPs; domestic PEPs remain excluded.
  • Non-Profit Organisations (NPOs) must now be registered on the NITI Aayog Darpan portal under PMLA compliance.
  • India's FATF Mutual Evaluation (2024) rated India's AML framework positively, placing it in the "Regular Follow-up" category.
  • The ED has significantly expanded enforcement actions — filing over 5,000 cases and attaching properties worth thousands of crores in recent years.
  • PMLA remains under political debate, with opposition parties alleging selective use against political rivals.

UPSC Exam Corner

Prelims: Key Facts

  • PMLA enacted in 2003, enforced from 1 July 2005
  • Enforced by the Enforcement Directorate (ED) under Ministry of Finance
  • Section 5 — provisional attachment (180 days); Section 24 — reverse burden of proof
  • Section 45 — twin conditions for bail; Vijay Madanlal Choudhary (2022) upheld these
  • Money laundering is a continuous offence (2019 amendment via Finance Act)

Mains: Probable Themes

  1. Evaluate the effectiveness of PMLA in combating money laundering and terror financing
  2. ED's expanding powers under PMLA — accountability and oversight concerns
  3. Reverse burden of proof and stringent bail conditions — do they violate fundamental rights?
  4. Role of FIU-IND and PMLA in India's FATF compliance
  5. Political misuse allegations vs. institutional independence of the ED

Sources: ED Official — PMLA, India Code — PMLA, DOR — PMLA Overview, Lexology — PMLA Deep Dive