🌐 Introduction

Money laundering in India poses a serious challenge to the economy, financial security, and law enforcement. To counter it, the Prevention of Money Laundering Act, 2002 (PMLA) was enacted.

One of the most crucial parts of this Act is found in Sections 16 to 24, which detail the investigative powers of authorities—ranging from survey and search to seizure, arrest, retention of property/records, presumptions, and burden of proof.

This article provides a section-wise, simplified explanation of these provisions, making them easier to understand for law students, professionals, and the general public.

📑 Section 16: Power of Survey

If authorities believe (with written reasons) that a money laundering offence has been committed, they may enter and survey any place where such activity is taking place or where records related to it are stored.

During such a survey, officers may:

• Inspect and take copies of records.
• Verify “proceeds of crime” or related transactions.
• Collect relevant information.
• Make inventories of property.
• Record statements of people present.

They must also send the reasons and evidence collected to the Adjudicating Authority in a sealed envelope.

Explanation

The survey stage is less invasive than search and seizure. It acts as the first step—allowing authorities to gather preliminary evidence before moving to stronger measures like seizure or arrest.

Illustration

If ED officers suspect that a real estate company is inflating project costs to launder black money, they can survey the company’s office, check ledgers, and question staff.

🔍 Section 17: Search and Seizure

When the Director or an authorised senior officer has credible information, they can order a search and seizure operation. This power is exercised if a person is believed to:

1. Have committed money laundering,
2. Possess proceeds of crime,
3. Hold records connected to money laundering, or
4. Possess property related to crime.

The officer can:

• Enter and search any place, vehicle, vessel, or aircraft.
• Break locks if required.
• Seize property or records.
• Freeze property (if immediate seizure is impractical).
• Record witness statements.

The officer must send the reasons and material to the Adjudicating Authority. Within 30 days, an application must be filed seeking retention or continuation of freezing orders.

Explanation

This is the core investigative power under PMLA. Unlike a mere survey, it allows actual seizure or freezing of property suspected to be proceeds of crime. Judicial oversight is maintained by requiring the Adjudicating Authority’s approval.

Illustration

Suppose ED receives information that a businessman has stored ₹50 crores in cash in a warehouse from illegal mining. Officers can raid the warehouse, seize the cash, and freeze his bank accounts.

🧾 Section 18: Search of Persons

If authorities have reason to believe that a person is carrying illegal records or proceeds of crime on their person, clothing, or belongings, they may search the individual.

Rules include:

• If the person requests, they must be taken to a Gazetted Officer or Magistrate before search (within 24 hours).
• A woman can only be searched by a woman.
• Two independent witnesses must be present.
• A list of seized items must be prepared and signed by witnesses.
• Statements may be recorded.
• Within 30 days, an application must be filed before the Adjudicating Authority to retain the seized items.

Explanation

This provision safeguards individual rights while giving officers the ability to detect concealed evidence. It also prevents abuse through mandatory safeguards like presence of witnesses and judicial oversight.

Illustration

At an international airport, ED suspects a passenger is carrying documents linking him to offshore shell companies. The passenger insists on being searched before a Magistrate, which is his legal right.

🚓 Section 19: Power to Arrest

If authorised officers believe (with written reasons) that a person is guilty of money laundering, they may arrest them.

• The arrested person must be informed of the reasons.
• The arrest order and supporting material must be sent to the Adjudicating Authority.
• The person must be produced before a Magistrate or Special Court within 24 hours.

Explanation

This section ensures that arrests are not arbitrary. Officers must have concrete material, and judicial oversight begins within 24 hours.

Illustration

If a banker is found actively helping clients launder money by layering funds through fake accounts, the ED can arrest him, but must present him before the Special Court the next day.

💰 Section 20: Retention of Property

• Property seized or frozen under Section 17 or 18 can be retained for 180 days if needed for adjudication.
• After 180 days, it must be returned unless the Adjudicating Authority allows extension.
• Once the Special Court passes confiscation orders, unrelated property must be released.
• Authorities can hold back release for 90 days if the property is required for appeal proceedings.

Explanation

This provision balances investigative needs with the rights of property owners. Retention is allowed but strictly time-bound and subject to judicial approval.

Illustration

If ED seizes gold jewellery from a suspect, they can keep it for up to 180 days. If the court finds the jewellery not linked to laundering, it must be returned.

📂 Section 21: Retention of Records

• Records seized or frozen (like documents, contracts, digital files) can be retained for 180 days.
• The person from whom records are seized is entitled to copies.
• After 180 days, records must be returned unless the Adjudicating Authority extends retention.

Explanation

Records are as important as property in proving money laundering. However, access to copies ensures businesses can continue functioning while the investigation is ongoing.

Illustration

If ED seizes a company’s accounting software database, the company will be provided copies so it can continue operations.

🖋️ Section 22: Presumption Regarding Records/Property

If property or records are found with a person during search, seizure, or freezing, it is presumed that:

1. The property belongs to that person.
2. The records are authentic.
3. The handwriting, signature, or attestation is genuine.

For records received from outside India (duly authenticated), the same presumption applies.

Explanation

This section shifts the burden of proof to the accused. Instead of the State proving ownership or authenticity, the person must disprove it.

Illustration

If ₹10 lakhs cash is seized from a businessman’s locker, the law presumes it belongs to him and is genuine, unless he proves otherwise (e.g., showing it belongs to a client).

🔗 Section 23: Presumption in Interconnected Transactions

If money laundering involves multiple connected transactions, and one is proved illegal, the rest are presumed to be illegal unless proven otherwise.

Explanation

This prevents accused persons from breaking transactions into smaller parts to escape liability.

Illustration

If three land purchases are linked to the same fund source and one is proven to be financed by proceeds of crime, the law presumes the others are also tainted.

⚖️ Section 24: Burden of Proof

• For persons directly accused of money laundering, the burden of proof lies on them to show that property is not proceeds of crime.
• For other persons, the Court may presume guilt unless they prove otherwise.

Explanation

This section flips the normal rule of criminal law (“innocent until proven guilty”). Here, once the prosecution establishes possession of property, the accused must prove its lawful origin.

Illustration

If an accused buys a luxury villa with unaccounted funds, it is presumed to be proceeds of crime. He must show legitimate income sources—like tax-paid earnings—to defend himself.

Quick Reference Table: Powers under PMLA (Sections 16–24)

Conclusion

Sections 16 to 24 of PMLA give wide-ranging powers to enforcement authorities in India to investigate money laundering. They can survey, search, seize, arrest, and retain property or records. At the same time, safeguards like judicial oversight, mandatory recording of reasons, witness requirements, and time limits ensure checks on these powers.

For law students, these provisions are essential for exams and research. For professionals and businesses, understanding them is critical to ensure compliance. For the general public, it highlights how India tackles financial crimes that destabilize the economy.