The PMLA paradox

OVER the past decade, India has witnessed a staggering rise in cases registered under the Prevention of Money Laundering Act (PMLA), with nearly 5,300 cases reported between 2014 and 2024. However, this surge in cases contrasts sharply with the dismal conviction rate — only in 40 cases in 10 years. This troubling disparity calls into question the effectiveness of the enforcement mechanism, raising concerns about the quality of investigations and the use of this powerful legal tool. The 2019 amendment to the PMLA, which significantly expanded the scope of what constitutes a ‘proceeds of crime’, has been a turning point. While intended to strengthen the fight against money-laundering, the amendment has led to an exponential increase in cases, often involving high-profile political figures. This has sparked allegations that the PMLA is being weaponised for political purposes rather than serving its intended aim of curbing financial crimes. The others charged under the PMLA include business leaders, bureaucrats and even farmers, highlighting the law’s expansive reach and controversial application.

The Supreme Court has also weighed in, urging the Enforcement Directorate (ED) to focus on quality prosecution and scientific investigation. The low conviction rate suggests that cases may be pursued without sufficient evidence, leading to prolonged detentions and trials that yield little in terms of justice. The court’s recent emphasis on safeguarding the rights of the accused underlines the need for a more balanced approach — one that ensures the guilty are punished, while protecting individuals from unjust persecution.

As the ED continues to expand its reach, it must heed these judicial admonitions and prioritise fair and rigorous investigations. A failure to do so risks undermining public confidence in the legal system and turning the PMLA into a tool of political vendetta rather than a robust framework for fighting financial crime.