Syllabus: GS2/ Polity and Governance
Context
- The Supreme Court held that a prior sanction will precede the prosecution of public servants accused of money laundering charges in discharge of official duty.
Background
- The Supreme Court dismissed a plea by the Enforcement Directorate (ED), which had challenged a high court verdict that quashed the cognisance order on the agency’s complaint against two IAS officers.
- The decision reinforced the application of Section 197(1) of the Code of Criminal Procedure (CrPC) in PMLA cases.
- Section 197(1) mandates that no prosecution against a public servant can proceed without obtaining prior sanction from the competent authority.
- The provision corresponds to Section 218 of the Bhartiya Nagrik Suraksha Sanhita, 2023.
| What is Money Laundering? – Money laundering is the illegal process of making large amounts of money generated by criminal activity, such as drug trafficking or terrorist funding, appear to have come from a legitimate source. 1. In terrorism financing the funds were used to procure arms and ammunition and for training the cadres of the violent extremist organization, among other purposes. – The money from the criminal activity is considered dirty, and the process “launders” it to make it look clean. Prevention of Money Laundering Act (PMLA) 2002 – It was enacted by Parliament of India under Article 253 of Constitution in 2002 to prevent money laundering and provide for the confiscation of property derived from or involved in money laundering. – PMLA and the Rules notified there under came into force with effect from 2005, and it was further amended in 2009 and in 2012. Provisions: – Sec. 3 of PMLA defines the offense of money laundering as any process or activity connected with the proceeds of crime and projecting it as untainted property. – Prescribe obligation: PMLA prescribes the obligation of banking companies, financial institutions and intermediaries for verification and maintenance of records of the identity of all its clients. – Empowerment of officers: PMLA empowers Directorate of Enforcement to carry out investigations in cases involving offense of money laundering and also to attach the property involved in money laundering. – Special Courts: It envisages the designation of one or more courts of sessions as Special Court to try the offenses punishable under PMLA. – Agreement for Central Government: It allows the Central Government to enter into an agreement with the Government of any country outside India for enforcing the provisions of the PMLA. |
Conclusion
- By applying Section 197(1) to PMLA prosecutions, the court created a check against arbitrary or politically motivated prosecutions of public servants.
- It emphasized PMLA’s Section 65, which makes the CrPC applicable to PMLA procedures unless inconsistent with PMLA’s provisions.
Source: IE
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