• UGI USER
  • Nov 29, 2023
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Madras High Court Halts Summons

Why in News?

  • Madras High Court has granted an interim stay on the Enforcement Directorate’s (ED) summons to five district collectors regarding its probe into alleged illegal sand mining in Tamil Nadu.
  • The court asserted that the ED cannot engage in a fishing expedition under the Prevention of Money Laundering Act (PMLA) and must establish the existence of a predicate offence.
Source:The Hindu

Prevention of Money Laundering Act (PMLA)

  • Prevention of Money Laundering Act (PMLA) was enacted in 2002 to combat money-laundering, coming into force on July 1, 2005.

Key Provisions

  • Proceeds of Crime Restriction: Prohibits the use of crime proceeds for funding activities.
  • Definition of “Proceeds of Crime”: Includes any property derived from or involved in money-laundering.
  • Enforcement Directorate (ED) Authority: Empowers the ED to investigate and issue preventive orders.
  • Confiscation: Allows for the confiscation of property linked to money-laundering.
  • Adjudication and Appeals: Establishes Adjudicating Authority and Appellate Tribunal.

Challenges

  • Overreach Criticism: PMLA criticized for being overly broad, granting excessive power to the ED.
  • Effectiveness Concerns: Criticisms include doubts about the law’s efficacy in countering money-laundering.
  • Political Targeting Allegations: Accusations of PMLA misuse for targeting political opponents.

Impact

  • International Confidence: Boosts global trust in India’s commitment to curbing money-laundering.
  • Financial Gains: Results in the confiscation of substantial assets from money-laundering activities.
  • Deterrent Effect: Acts as a deterrent, dissuading criminals from using India for money-laundering.