Underlining the Scope of Investigation under PMLA

Ashish M. Shaji

01 Nov, 2021

The Prevention of Money Laundering Act 2002 was introduced to tackle the growing concern of money laundering. Money laundering is a process through which a person makes massive amount of illicitly obtained money and hides its original source. The Act bestows power and authority to the investigating authorities to investigate instances of money laundering. In this article, we shall have a discussion on investigation under PMLA by proper officer, issuance of summon and its scope.

Investigation Procedure

The procedure for investigation of a money laundering offence involves various stages—the investigating authority proceeds in the following manner.

• Registration of FIR;
• Registration of the ECIR (ECIR means the Enforcement Case Information Report);
• Summon under Section 50;
• Filing of final complaint in special court.

Summon under the PMLA 2002

The Prevention of Money-laundering Act, 2002 lays down the scope for power of officers pertaining to summon, documents production and providing evidence. Summon is issued by the authority, and it can be issued for various purposes such as for production of documents, or to provide evidence, to conduct an investigation under the Prevention of Money Laundering Act, 2002. Additionally, director, Additional Director, Joint Director and Deputy or Assistant Director can also summon a person whom he considers necessary in order to produce any records during the investigation or to hand over the evidence.

When the summon is issued, the person against whom the summon is issued needs to attend the investigation, for the purpose of giving evidence, to produce records, which were in his possession, for necessary examination and verification for investigation under PMLA.

Investigation under PMLA: Power of Director

The power vested with a civil court under CPC 1973 at the time of trying a case in matters such as discovery and inspection, enforcing attendance of a person, production of records and receiving evidence, issuing commissions of examination of witnesses and documents, have also been conferred on the authority exercising power under Section 50. (G.RadhaKrishnan vs. Ass. Director (2014)).

Further, every proceeding under sub-section (2) and (3) of Section 50 (PMLA) is deemed to be judicial proceeding. This was held in the case of B. Narayanaswamy vs. Deputy Director and others (2019).

Also, Section 50(5) of the PML Act provides that on behalf of the central government, an officer whether director, add. Director, joint director, deputy director can impound and keep records in his custody for a period, he thinks fit.

Provided that-

• The deputy director will not take any records without providing the reasons for doing so;
• Or shall not keep any records under his custody for more than 3 months without getting the previous approval of the joint director.

Essential points to note during Investigation under PMLA

• Until the prosecution complaint is filed under Section 44 of the Act, no one can be treated as an accused in the money laundering offence. Unless persons have been found to be involved in the offence of money laundering, they cannot be treated as an accused at the enquiry stage.
• Further, the investigating officer should not harass a person during investigation. Such officer cannot harass a person mentally, physically or verbally even at the enquiry stage.
• A person cannot be treated as an accused to extract a statement against his will.
• Under Section 2(na) of the PML Act^[1], investigation is defined as an investigation including all proceedings under this act performed by the director/by an authority authorised by the central government under this act for evidence collection. Therefore the purpose of investigation should be to collect evidence.
•  The statement made before the enforcement directorate is admissible during the investigation however, if a statement is made before a police officer, then it is an inadmissible evidence.
• The evidence given by a witness is relevant during the investigation however the witness should be cross-examined in order for the statement to be termed as an evidence of the witness or to be read as an evidence.

Relevancy of Statements recorded after arrest

If an accused person is forced to be a witness against himself, then it violates the principle enshrined in Article 20(3) as the officers of ED can force individuals to give statement through undue influence. If the statement is recorded after the arrest of the suspect by force then it shall be inadmissible. Moreover, recorded statements should stand the test of the trial to be relevant.

In a case, it was seen that the accused persons had retracted their statements and said that the statement recorded earlier was under threat and forcefully recorded. The Hon’ble court held that the statement obtained through any improper means should be rejected immediately.

The confession made by an individual which is voluntary and devoid of any pressure shall be accepted. The burden lies on the prosecution to prove that the confession obtained was voluntary and is not obtained by threat. A person who is accused to have committed an offence is not expected to prove that the confession was made under undue influence.

Conclusion

Extensive powers have been given to investigating officers under PMLA however, investigation under PMLA should be done only for collection of evidence, and an investigating officer shall not harass a person in the name of investigation.

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