Trinamool Congress leader and the former head of the West Bengal Board of Primary Education, Manik Bhattacharya, recently asked the Supreme Court to invalidate the Enforcement Directorate’s (ED) detention of him based on suspicion of money laundering in connection with alleged involvement in the 2014 Teachers Eligibility Test, which was used to hire primary school teachers.
What is Money Laundering?
Money laundering is the process of making significant sums of money obtained through illegal activity, such as the trafficking of illegal drugs or financing of terrorism, appear to have been obtained from a legitimate source. Large gains are made from criminal activity, like illegal arms sales, smuggling, prostitution, drug trafficking gangs, insider trading, bribery, and computer fraud schemes.
As a result, it gives money launderers an incentive to “legitimize” their unlawful gains through money laundering. Money created is referred to as “dirty money,” and the act of turning “dirty money” into “legal” money is known as money laundering.
There are three stages involved in Money Laundering. The introduction of illicit funds into the established financial system signifies the start of the process. In the second stage, injected funds are stacked and dispersed across a variety of transactions in an effort to conceal their corrupt source.
In the third and final stage, money is introduced into the financial system in a way that its initial connection to the crime is attempted to be erased, allowing the criminal to use it as “clean money.”
What is the Prevention of Money Laundering Act (PMLA), 2002?
India signed the Vienna Convention pledging to fight the global threat of money laundering, prompting the creation of the Prevention of Money Laundering Act (PMLA). These consist of the 1988 Convention of the United Nations against Illicit Traffic in Narcotic Drugs and Psychotropic Substances. 1989 Basle Declaration of Principles
The Financial Action Task Force on Money Laundering issued forty recommendations in 1990. The United Nations General Assembly approved the Political Declaration and Global Program of Action in 1990.
A criminal law was passed to stop money laundering and to make provisions for the confiscation of assets obtained via or connected to money laundering and associated activities. It serves as the cornerstone of the legal system India set up to fight money laundering.
The provisions of this legislation apply to all financial establishments, particularly banks (including the RBI), mutual funds, insurance firms, and their financial intermediaries.
What are the recent amendments?
The term “proceeds of the crime” refer to not only the property generated from the scheduled offence but also to any other property derived or acquired by participation in any criminal activity related to or similar to the scheduled offence.
Money laundering was a crime that relied on another one, known as the predicate offence or scheduled offence, rather than being an independent offence. The legislation aims to make money laundering a separate offence.
If an individual is involved in the proceeds of a crime in any way, whether directly or indirectly, they will be charged with money laundering under Section 3 of the PMLA. This amendment further stated that because money laundering is a continuing offence, the individual would be regarded as having participated in the offence as long as they are benefiting from associated actions.
What is happening now?
A political leader recently asked the Supreme Court to overturn his arrest by the Enforcement Directorate (ED) on suspicion of money laundering, but the court denied his request.
A Calcutta High Court judge granted permission for CBI to question Bhattacharya in relation to the scam in a series of orders in June of this year, and if necessary, to question him in detention if he refused to comply. The HC division bench subsequently confirmed this.
However, the SC ordered that no coercive measures be employed against the accused in response to an appeal. Bhattacharya was subsequently detained by the ED on October 10.
The TMC leader questioned this before the SC and argued that since the top court had already shielded him from arrest in the CBI case, the ED’s detention of him during this time for the “identical offence” was “unwarranted.” Bhattacharya requested that the court rule the arrest to be unlawful in his petition.
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