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The Prevention of Money Laundering Act 2002 (PMLA) was enacted in 2002 and enforced on 1st July 2005. The legislative intent behind such enactment was the international commitment made by India to the United Nations being the signatory to the declaration on the need of tackling money laundering, passed in the ‘Special Session on Countering World Drug Problem Together’ in 1988.To fulfil the objective of Act i.e., preventing money laundering in India, it is important that there exists an authority empowered to effectuate the provisions of the Act, and that is when the Adjudicating Authority steps in, the provisions in respect of which have been enumerated in Section 6 of the Act. Therefore it is essential to be aware to the Adjudicating Authority under PMLA, its composition and powers which shall be discussed in the present article.
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Section 2 of PMLA defines Adjudicating Authority (AA) as an authority appointed under Section 6(1) of the said Act.
Section 6 (1) of the Act states that the Central Government shall appoint an Adjudicating Authority by notification for exercising jurisdiction, powers and authority conferred by or under this Act.
The definition of an Adjudicating Authority under PMLA can be better understood through the judgement in the case titled Pareena Swarup vs Union of India.Writ Petition NO.634 OF 2007 dated 30th September 2008, the brief facts of the case are –
The petitioner in the case had filed a writ petition under Article 32 of the Indian Constitution before the Hon’ble Apex Court seeking a declaration of several provisions of the PMLA 2002, including Section 6 that dealt with Adjudicating Authority and claimed it to be unconstitutional, submitting that the provisions of the Act are so provided that there may not be independent Judiciary for deciding the cases under the Act, since the Chairperson and the Members are to be selected by the selection committee presided by the Revenue Secretary.
The petitioner further contended that the statutory provisions of the Act and the rules, particularly the one related to the constitution of the Adjudicating Authority and Appellate Tribunal, are in violation to the basic constitutional guarantee of a free and independent Judiciary, beyond the legislative competence of the Parliament.
It was ultimately pleaded by the petitioner that the provisions brought forward by her must be quashed on the ground of them being unconstitutional, inconsistent with the separation of power and interfering with the judicial functioning of the Tribunal as ultra vires of the Indian Constitution.
Deciding upon this matter the Apex Court held the following –
“The ‘Adjudicating Authority’ is a body of experts from different fields to adjudicate on the issue of confirmation of Provisional attachment of property involved in money laundering. The functions of adjudicating authority are civil in nature to the extent that it does not decide on the criminality of the offence nor does it have power to levy penalties or impose punishment. Adjudication is a function which is performed by Executives under many statutes.”
The above-mentioned extract from the judgement can help in providing a clarity on the definition of an Adjudicating Authority under PMLA.
An Adjudicating Authority must consist of a
wherein the person having experience in the law shall have the following qualification to qualify as a member –
The person having experience in the field of finance, administration or accounting unless he has such qualifications as may be prescribed.
The chairman shall be appointed by the Central Government
The provisions regarding the jurisdiction of the adjudicating Authority are discussed below.
The Chairperson is empowered to transfer a Member from one Bench to another Bench.
In case, at any stage of the hearing of any matter or case, if it seems to the Chairperson or Member depending on the nature of the case should be heard by a Bench consisting of two Members, the Chairperson can transfer the same or, it can be referred to him for transfer, to such Bench as deemed fit by the Chairperson.
The powers of the Adjudicating Authority shall not be bound by the procedure prescribed in the Code of Civil Procedure, 1908, but would be as per the principles of natural justice and, with regard to the provisions of this Act, the Adjudicating Authority shall be empowered for regulating its own procedure.
It is an undeniable fact that Adjudicating Authority plays a significant role in the prevention of money laundering. The clarity of the relevant provisions regarding the Adjudicating Authority under PMLA can facilitate the smooth functioning and faster disposal of the cases under PMLA, which can, in turn, help in combating money laundering in India, thereby fulfilling the objective of this Act.
Also Read:Different Stages of Money LaunderingAttachment of Property under PMLA- An OverviewSupreme Court Judgment Delineating Statutory Safeguards under PMLA
Shubhangi has completed her B. A.LLB (H) with specialization in Business Laws from Amity University. She is particularly interested in legal research and writing and wishes to utilize her knowledge to create informative legal content. She has prior experience in corporate and criminal litigation and has great drafting skills. She has also published various research papers in reputed journals.
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