Only 313 Arrests Under PMLA In 20 Years; Strict Safeguards Are There : Solicitor General Tells Supreme Court

Solicitor General of India Tushar Mehta on Wednesday urged that in view of the international conventions for tackling money laundering to which India is party, the consequent 'peer reviews' and the implications of non-compliance, the Supreme Court perhaps may not want to apply while deciding the validity of the PMLA the traditional standards which it employs in analysing the constitutionality of any other conventional statutes."There may be some leeway to the legislature if there is no violation of any fundamental rights", he prayed.At the outset, the SG told the bench, "Your Lordships are dealing with a statute which is not just a penal statute but a preventive statute, a regulatory statute providing for investigation and final prosecution. There is a heavy responsibility that we the counsel appearing for the government carry with us. The responsibility I carry on behalf of the government of India is onerous because this Act is not a standalone Act which can be judged the way conventionally the honourable courts are judging penal statutes. The reason is that India is a part of a global anti-money-laundering network. Various conventions to which India is a party, India is a member, a signatory required all member states to bring their respective money laundering law in tune with each other because the global community found that money laundering is such a menace which cannot be tackled or treated at individual country level, it will have to be a global response. That gave several guidelines as to how the definition is to be framed, what should be the regime etc""Ultimately, that led to one body which is also mentioned in the preamble to the Act- the Financial Action Task Force- it is a body consisting of several countries and they give recommendations as to what should be done for the purpose of strengthening the money laundering regime of each country because the global community believes that if money laundering takes place, for example, in India, it affects the economy of other countries also, it has a cascading effect on other economies.There is also a system whereby periodically an assessment takes place by the FATF, which is called peer review. All signatory nations would come and examine our regime, how India's regime is functioning, how its anti-money-laundering agencies are functioning, what is the legislative framework within which we are tackling money laundering. This is very, very crucial- they give gradings. These are the nations which are neither against India nor for India, it is neutral, our members also go as a part of assessing teams to other countries. Based on their examination of our design and enforcement regime, they give three grades- one is NC that is non-compliant, second is PC which is partially compliant and third is FC that is fully compliant. If particular parameters are not met, the resultant grading has international ramifications in terms of India's credit rating in terms of our capability of taking financial assistance from World Bank, Asian Development Bank etc. The way in which the entire architecture of the PMLA is structured is on the basis of that international global network and even the amendments, particularly section 3, are also made based upon the results of that assessment made by FATF", the SG continued to advance."Not only do we have to bring our law in consonance with this broad framework, but we would also be evaluated periodically. I will elaborate why we cannot as a nation afford to lag behind- the next evaluation is due in 2023. FATF conducts mutual evaluation of its members as regards the level of implementation of its recommendations on an ongoing basis. These are peer reviews where members of different countries assess another country. If any country has 'non-compliant' or 'partially compliant' rating for 8 or more recommendations, it is put in the 'Enhanced follow-up' immediately. There is the 'Grey list'. As of October 2021, 23 jurisdictions have been placed in the grey list for enhanced monitoring by FATF. These include Cambodia, Panama, Philippines, Pakistan, South Sudan among others. Pakistan got nominated in the grey list by FATF in June 2018 for serious deficiencies in compliance with FATF standards on terror financing and targeted financial sanctions", told the SG"Then comes the black list, where there is enhanced due diligence against that country which all members will be doing. In most serious cases, countries are to apply counter measures to the ongoing money laundering, terrorist financing and proliferation financing risk emanating from the country. As of 21 February 2020, only two countries were in the FATF blacklist- that is, North Korea and Iraq. So complete financial sanctions are imposed. That country may have to then suffer trade deficit, inflation, devaluation of currency etc", submitted the SG"Even though there may be no legal consequences, it means countries have failed to prevent international money laundering and terrorist...

Only 313 Arrests Under PMLA In 20 Years; Strict Safeguards Are There : Solicitor General Tells Supreme Court

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