When people think of crime, the image that comes to mind is usually one of physical violence. Yet one of the most economically damaging categories of criminal activity is neither violent nor visibly organised: it is white-collar crime, corruption and fraud committed by those who occupy positions of respectability and trust. Edwin Sutherland coined the term in 1939 to capture the impact of non-violent offences committed by the wealthy and powerful. In India, the primary legislation to combat such offences is the Prevention of Money Laundering Act, 2002 (“PMLA”). Enacted to fulfil India's obligations under the FATF standards and UNCAC, the statute targets the proceeds of crime rather than the offence alone, reaching what Edward Ross once called the “criminaloid”: the respectable offender hiding behind social status. Statutes such as the Benami Transactions (Prohibition) Act, the Prevention of Corruption Act and the Fugitive Economic Offenders Act supplement the PMLA, which remains the centrepiece. This essay examines its most contested provisions.

The Offence of Money Laundering

Money laundering under the PMLA covers any process involving the proceeds of crime, including their concealment, possession, acquisition, use, or projection as untainted property. The Finance (No. 2) Act, 2019 clarified that it is a continuing offence, making each act under Section 3 independently punishable, so even knowingly possessing or using tainted property may constitute money laundering. Central to this framework is the concept of "proceeds of crime" under Section 2(1)(u), which includes any property derived directly or indirectly from a scheduled offence. In Vijay Madanlal Choudhary v. Union of India, the Supreme Court held that the Enforcement Directorate (ED) must establish a direct or indirect nexus between the property and the scheduled offence. While Section 5 empowers the ED to provisionally attach such property for 180 days on a "reason to believe" that it may be concealed or transferred, courts have insisted that these reasons be recorded in writing and demonstrate the requisite nexus, as reaffirmed in Suman Chattopadhyay v. Directorate of Enforcement. For instance, if a public official uses a ₹30 lakh bribe to purchase a car and a flat, both assets constitute proceeds of crime as indirect products of the underlying criminal activity.

Bail under PMLA

Bail thresholds are deliberately high. Section 45's “twin conditions” require the court to be satisfied there are reasonable grounds to believe the accused is not guilty, and that they are unlikely to reoffend if released. This works alongside Section 24, which reverses the burden of proof so involvement is presumed unless disproved, criticised for enabling pre-trial coercion. Compounding this, the ED withholds the ECIR (Enforcement Case Information Report), leaving an accused unaware of the full case against them while contesting bail.

Constitutional and Procedural Concerns under the PMLA

The reversed presumption of innocence and twin bail conditions sit uneasily with the constitutional guarantees under Articles 14, 20, 21 and 22, and the ED's wide investigative powers are criticised for lacking procedural safeguards. In Pankaj Bansal v. Union of India, the Supreme Court held that grounds of arrest must be furnished to the accused in writing at the time of arrest, even where the ECIR itself is withheld. In Nik Nish Retail Ltd. v. Assistant Director, Enforcement Directorate, the Appellate Tribunal set aside an attachment because the property pre-dated the alleged loan irregularity, leaving a businessman's assets frozen for years on the strength of the ED's “reasons to believe” alone.

Attachment and Substitution of Property

Provisional attachment prevents the concealment, transfer or dissipation of proceeds of crime pending investigation and trial; without it, offenders could easily frustrate confiscation. In practice, however, commercial properties, manufacturing units and bank accounts often remain attached for years while adjudication, trial and appeal remain pending. Though the Rules permit substituting attached property with a fixed deposit or equivalent security, such relief is rarely granted. Even a later acquittal cannot undo the commercial disruption and reputational harm suffered meanwhile. A more structured approach to substitution applications, with periodic judicial review of continuing attachments, would protect the State's interest while minimising prejudice to legitimate businesses.

Ground Reality

Of 911 prosecution complaints filed under the PMLA between January 2019 and October 2024, trials concluded in only 654, and just 42, roughly 4.6 percent, ended in conviction. Meanwhile the ED continues attaching assets and freezing accounts years before guilt is established, consequences a later acquittal cannot fully reverse.

Recent Developments

In Parvinder Singh v. Directorate of Enforcement, the Supreme Court held that, following the Bharatiya Nagarik Suraksha Sanhita, 2023, a Special Court taking cognizance of a PMLA complaint must comply with Section 223(1) of the BNSS, including hearing the accused where the proviso requires it, showing courts actively moulding the PMLA's stringent powers within the constitutional framework.

The Way Forward

Three reforms would enhance the Act's legitimacy: stricter timelines for complaints under Section 44, clearer ECIR disclosure to facilitate an effective defence, and stronger judicial scrutiny of the ED's "reason to believe" before attachment or arrest.

Ultimately, the PMLA's success should be judged not by conviction rates or asset attachments, but by its effectiveness in recovering illicit assets and deterring financial crime. While it has significantly strengthened India's anti-money laundering framework and aligned it with global standards, its enduring legitimacy depends on balancing robust enforcement with constitutional safeguards.