Finance

Prevention of Money Laundering Act: Concept of Search & Seizure

Money laundering involves disguising or concealing the illicit income and make it look legitimate. To curb such instances, Prevention of Money Laundering Act 2002 was introduced. The Act gives wide powers to officers to ensure effective implementation of the Act. This article examines the provision of search and seizure of property under the said Act.

Different powers of officers under Prevention of Money Laundering Act

As per the Prevention of Money Laundering Act 2002^[1], Director or any other officer not below the rank of deputy director authorised by him can authorize a person to search any building, place, vessel, vehicle or aircraft where he has a reason to think that proceeds of crime are kept.

Further, the Act also empowers Central Government to authorize a person to order search of a person. The authorised person can order search of a person if he has reason to believe that such secreted regarding anything under his possession, ownership or control, any record or proceeds of crime which can be useful or relevant to proceedings under the Act.

Officers not below the rank of Assistant Directors in Directorate of Enforcement can search persons and also seize records of property which can be useful or relevant.

Search under Prevention of Money Laundering Act

The Director or any person authorized by him may authorise any officer who is subordinate to him for search under the Act. The authorization is prescribed in Form I. Search can be done only once the report is sent to a magistrate or a complaint is filed before the Magistrate or the Court.

Search would be done before two local persons. The authority can enter by breaking locks, doors etc. Further, he may stop vehicle, vessel or aircraft. The occupier of the building, place, vehicle can be present during the search.

Procedure of Seizure

The officer or the authority can freeze or seize any record or property found during search. In case it is not practicable to seize record/property, then the officer can order to freeze a property.

The officer may hand it to the person from whom goods were seized for safe custody. The seizure memo will be prepared. The seizure memo would be in Form II, and Code of Criminal Procedure shall apply to search and seizure.

The authority shall prepare an index of copy of reason recorded for search with the material in his possession and send it to the Adjudicating Authority in a sealed envelope. The sealed envelope will be marked confidential and will be kept in an outer envelope, which shall be marked confidential. A proper record has to be maintained by the authority.  The adjudicating authority shall issue an acknowledgment in the Form IV.

Retention of Seized Property

The property that is seized or frozen under the relevant sections of the Act can be retained by the authorised officer if he has reason to believe that the property is needed for adjudication under Section 8- Section 20(1) of the Act.

It may be noted that the property can be retained for 180 days from the day when the asset was seized or frozen. The details regarding such property should be intimated to the adjudicating authority in the manner prescribed. The seized property should be returned to the person from whom it was seized after the 180 days period unless the adjudicating authority allows retention of property beyond such period.

Provisional Attachment of Property under Prevention of Money Laundering Act

Attachment refers to prohibition of transfer, conversion, disposition or movement of the property by an order issued under the Act. The property that is involved in the money laundering can be provisionally attached under the Act.

The authority can provisionally attach a property for up to 180 days if he has reason to believe that the person possess proceeds of crime and the proceeds of crime is likely to be dealt in a manner or concealed or transferred, which can frustrate the proceedings of confiscation of proceeds of crime.

The reasons to believe has to be recorded in writing. The reasons must be sent in a sealed envelope along with a copy of the attachment order to the adjudicating authority.

The provisional attachment order can be made only once the report is forwarded to the magistrate under Section 173 of the CrPc for taking Cognizance. It may be noted that provisional attachment can be made before filing such report to the magistrate in case of urgency where the property may disappear.

Management and Disposal of Confiscated Property

In case where the adjudicating authority decides that a property is involved in money laundering, then he can order that such property shall be attached or if it is already attached, the attachment will continue until the order of the trial court becomes final. The adjudicating authority can confiscate the property if the person is found guilty. It is worth mentioning here that the property to be confiscated shall vest in Central Govt.

The Central government shall appoint administrator who shall receive and manage property that is confiscated, and the administrator shall take measures to dispose of the property.

Special directors of enforcement of the regional office of the ED is appointed as administrators to receive and manage property confiscated under the Act.

Conclusion

The Prevention of Money Laundering Act 2002 was introduced to fight against the offence of legalizing the income/profit from an illegal source. The Act gives wide powers to officers to ensure effective implementation of the Act, which involves search, seizure and impounding of records.

Read our article:Tracing the Developments in the Prevention of Money Laundering Act, 2002