Provisional Attachment of Property Under Section 5 of the Prevention of Money Laundering Act¹

Podcast on Provisional Attachment of Property Under Section 5 of the PMLA

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Section 5 of the Prevention of Money Laundering Act, 2002² empowers authorities to provisionally attach property suspected of being involved in money laundering activities. This provision plays a crucial role in preventing the dissipation of assets and ensuring that proceeds of crime are available for confiscation.

Grounds for Attachment:

• The Director or a Deputy Director authorized by the Director can issue an order for provisional attachment if they believe, based on evidence, that a person possesses proceeds of crime and those proceeds are likely to be concealed, transferred, or dealt with in a manner that might frustrate confiscation proceedings.

Conditions for Attachment:

• Before issuing an attachment order, certain legal proceedings must be initiated related to the scheduled offense from which the proceeds of crime originated. These proceedings include:

  • A report forwarded to a Magistrate under Section 173 of the Code of Criminal Procedure, 1973.

  • A complaint filed by an authorized investigator before a Magistrate or court.

  • Similar reports or complaints filed under the corresponding law of another country.

• The Director or authorized Deputy Director can attach property even if these proceedings haven't been initiated if they believe that not immediately attaching the property would likely hinder proceedings under the PMLA. The reasons for this belief must be documented in writing.

Procedure for Attachment:

• The provisional attachment order must be in writing and can remain in effect for a maximum of 180 days from the date of the order.

• The Director or Deputy Director must immediately send a copy of the attachment order, along with the supporting evidence, to the Adjudicating Authority in a sealed envelope.

  
  

Duration and Cessation of Attachment:

• The attachment order automatically expires after 180 days or earlier if an order is issued under sub-section (3) of Section 8.

• The 180-day period excludes any time when the proceedings under this section are stayed by the High Court. An additional period of up to 30 days is added from the date the stay order is vacated.

  
  

Rights of Interested Persons:

• Despite the attachment, individuals with an interest in the immovable property retain their right to enjoy it.

• The term "person interested" includes anyone claiming or entitled to claim an interest in the property.

  
  

Filing of Complaint:

• The Director or the officer who issued the attachment order must file a complaint detailing the attachment facts with the Adjudicating Authority within 30 days of the attachment.

Key Points:

• Section 5 of the PMLA enables swift action to secure assets potentially linked to money laundering, preventing their disposal and safeguarding them for potential confiscation.

• The provision includes safeguards to ensure the attachment is justified and proportionate, requiring recorded reasons and adherence to specific legal procedures.

• It acknowledges the rights of individuals with legitimate interests in the attached property, allowing them continued enjoyment of the asset.

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¹  It is important to note that this explanation of Section 5 of the PMLA is based solely on the general understanding of the provision. Consulting the full section of the PMLA and relevant legal commentary is advisable for a comprehensive understanding of this provision.

²  For short, “PMLA”

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FAQ: Provisional Attachment of Property Involved in Money Laundering

1. What circumstances allow for provisional attachment of property?

The Director, or an authorized officer not below the rank of Deputy Director, can provisionally attach property if they have reason to believe (documented in writing) that:

• (a) A person possesses proceeds of crime, and

• (b) Those proceeds are likely to be concealed, transferred, or dealt with in a way that might frustrate confiscation proceedings.

2. What are the prerequisites for issuing a provisional attachment order?

3. How long can a provisional attachment order last?

4. What happens after a property is provisionally attached?

5. When does a provisional attachment order cease to be effective?

6. Can individuals with interests in attached immovable property still enjoy its use?

7. What is the role of the Adjudicating Authority in the attachment process?