Punjab MLA Sukhpal Khaira’s house attached: What does this ED action mean?

What does attachment of property mean under PMLA, 2002?

Under the PMLA, 2002, ‘attachment of property’ refers to a legal process where the authorities temporarily seize or freeze assets (movable or immovable property) that are suspected to be involved in money laundering or derived from the proceeds of crime. This is a key enforcement mechanism under the Act to prevent the accused from dissipating or transferring such assets during investigation or trial.

What is the legal basis of such attachment?

Section 5 of the PMLA, 2002, governs the attachment of property. It empowers the ED, the agency responsible for enforcing the PMLA, to provisionally attach property if there is reason to believe (based on evidence) that:

1. The property is ‘proceeds of crime’ (as defined under Section 2(1)(u)), or

2. The property is involved in money laundering.

What are the key aspects of attachment under PMLA?

1. Provisional attachment: The ED can issue a provisional attachment order for 180 days initially. This is done to prevent the accused from dealing with the property (e.g., selling, transferring, or hiding it). The order must be based on credible evidence and a ‘reason to believe’ that the property is linked to an offence under the Act.

2. Confirmation by adjudicating authority: The provisional attachment must be sent to the ‘adjudicating authority’ (established under PMLA) within a specified time. The authority reviews the case and, if satisfied, confirms the attachment within 180 days. If not confirmed, the attachment lapses.

3. Proceeds of crime: Proceeds of crime include any property derived or obtained, directly or indirectly, from a ‘scheduled offence’ (crimes listed in the PMLA Schedule, such as drug trafficking, corruption, terrorism, etc.) or any other property equivalent in value held by the accused.

4. Scope of property: Both movable (e.g., cash, bank accounts, vehicles) and immovable (e.g., land, houses) properties can be attached. Even property held by third parties can be attached if it is proven to be linked to the proceeds of crime.

5. Post-confirmation: Once confirmed, the attachment continues during the pendency of the trial. If the accused is convicted, the attached property may be confiscated by the government under Section 8(5) of the PMLA.

6. Rights of bona fide third parties: If a third party (not involved in the crime) has a legitimate claim over the attached property, they can approach the adjudicating authority or courts to seek relief.

What is the purpose of attachment?

The attachment mechanism aims to:

* Deter money laundering by ensuring that criminals cannot enjoy the benefits of their illicit gains.

* Facilitate recovery and restitution of property to victims or the state after conviction.

For example, if a person commits a scheduled offence like drug trafficking and uses the profits to buy a house, the ED can attach that house under PMLA if they have evidence linking it to the crime. The attachment restricts the person from selling or transferring the house until the legal process concludes.