Delhi High Court Affirms PMLA as Comprehensive Framework for Combating Money Laundering

New Delhi:

The Delhi High Court has delivered a notable ruling on money laundering legislation, providing detailed insights into the Enforcement Directorate's authority, property attachment procedures, and the interpretation of the Prevention of Money Laundering Act, 2002 (PMLA).

In its judgment, the court emphasized that PMLA constitutes a self-contained, rigorous, and comprehensive legislative framework designed to prevent the legitimization of illegally acquired funds, identify and confiscate crime proceeds, and safeguard financial integrity.

The court highlighted that PMLA ensures a fair, multi-tiered legal process. ED's actions under this legislation follow a well-structured and equitable procedure adhering to natural justice principles. This process encompasses notice issuance, hearing opportunities, adjudication with confirmation, and appeal provisions. Such measures guarantee that property attachment only occurs after individuals have received fair opportunity to present their case and submit evidence.

Regarding legal challenges, the High Court cautioned against the increasing practice of filing writ petitions directly under Article 226 to contest Provisional Attachment Orders. The court clarified that since the law already provides appellate and adjudicatory mechanisms, premature approaches to the High Court constitute misuse of legal provisions and unnecessarily burden the judicial system. Writ petitions are only maintainable in cases involving jurisdictional error or manifest illegality.

On the interpretation of "Proceeds of Crime" under Section 2(1)(u) of PMLA, the court determined that this definition extends beyond assets directly obtained from criminal activity to include assets indirectly connected or derived from such proceeds. For example, when corrupt officials invest bribe money in real estate or securities and generate profits, the entire amount—including appreciation—qualifies as proceeds of crime due to its unlawful origin.

The court reaffirmed that money laundering constitutes a continuing offense that persists as long as tainted money remains concealed, layered, or projected as legitimate. Each subsequent transaction or reinvestment designed to disguise the illicit origin of funds forms part of the laundering chain and remains prosecutable under PMLA.

Addressing arguments concerning Section 66(2), the court clarified that information-sharing provisions are procedural rather than preconditions for attachment. The ED possesses independent authority under Section 5 to attach properties in a preventive and protective manner. Delays in information sharing do not invalidate a Provisional Attachment Order when the illicit origin of funds has been established.

The court confirmed that PMLA aligns with India's international obligations under the Vienna Convention, Palermo Convention, and FATF guidelines. Its objective is to combat money laundering, confiscate crime-linked assets, and prevent illicit funds from entering the legitimate economy.

This Delhi High Court ruling reinforces that the ED's investigative powers and property attachment authority under PMLA are legally sound and procedurally fair. The judgment discourages writ jurisdiction misuse and emphasizes that transforming the form or value of illicit funds does not eliminate their criminal taint.