✨ Introduction
💰 Money laundering undermines the financial system and fuels illegal activities by legitimizing ill-gotten wealth. To counter this, the Prevention of Money Laundering Act, 2002 (PMLA) empowers authorities with tools like Provisional Attachment of Property. This ensures that suspected assets are not hidden, transferred, or disposed of before the investigation and adjudication process concludes.
🛡 Purpose
Money laundering threatens the integrity of the financial system by allowing illegal funds to enter the mainstream economy. To prevent criminals from disposing of or transferring these ill-gotten assets during investigations, Section 5 of the Prevention of Money Laundering Act, 2002 (PMLA) empowers authorities to provisionally attach property.
Provisional attachment is essentially a temporary freeze on assets suspected to be connected with proceeds of crime. It ensures that property remains under the control of authorities, safeguarding it until the Adjudicating Authority can decide whether it should be confiscated permanently.
💡 In simple terms, it’s like putting a “hold” on a bank account or property while the case is being investigated, to ensure the suspect cannot secretly transfer or sell it.
👤 Who Can Attach
The Act clearly defines who has the authority to initiate provisional attachment:
- Director of the Enforcement Directorate (ED)
- Any officer not below the rank of Deputy Director
This hierarchy ensures that attachment orders are issued only by senior officers, reducing the risk of misuse or arbitrary actions.
⚙️ Procedure
The provisional attachment of property is a structured process. Each step is designed to balance enforcement with legal safeguards:
📝 Collection of Evidence
- The officer must gather sufficient evidence and form a reasoned belief that the property is involved in money laundering or is a proceeds of crime.
- This belief must be based on tangible facts, not mere suspicion.
🖊 Issuance of Attachment Order
- Once the officer is satisfied, a written order is issued to provisionally attach the property.
- This order effectively freezes the property or asset, preventing any transfer, sale, or encumbrance.
⏳ Validity of Attachment
- The attachment is valid for a maximum of 180 days, or until the Adjudicating Authority issues its order—whichever is earlier.
- This temporary nature ensures the measure is preventive, not punitive, until due process is completed.
📦 Communication with Adjudicating Authority
- A copy of the order, along with the supporting material, must be sent in a sealed envelope to the Adjudicating Authority immediately.
- This ensures oversight and transparency in the attachment process.
📄 Filing of Complaint
- Within 30 days of the attachment, a formal complaint must be submitted to the Adjudicating Authority stating the facts and reasons for the attachment.
- This step allows the authority to review the case and ensure legality.
⚠️ Important Notes
- Provisional attachment is an administrative measure, not a final order of confiscation.
- The person whose property is attached may not be informed immediately to prevent interference with the investigation.
- The reasons for attachment are formally communicated when the Adjudicating Authority issues its notice.
- The Act provides strict timelines to ensure checks and balances, preventing undue hardship on innocent parties.
💡 Example
Suppose a businessman’s bank account shows large, suspicious transactions that match patterns of money laundering. The Enforcement Directorate can provisionally attach the account, effectively freezing funds, until an investigation establishes whether the money is legitimate. This prevents funds from being withdrawn or moved while the case is ongoing.
Similarly, immovable property, vehicles, or even shares suspected to be purchased with laundered money can be provisionally attached to protect the asset from being sold or hidden.
✨ Conclusion
🔒 Section 5 acts as a protective shield in the fight against money laundering. Though provisional and bound by timelines and oversight, it prevents offenders from enjoying the benefits of unlawful gains while justice is underway. By freezing assets early, enforcement agencies preserve the integrity of financial investigations and uphold the rule of law.
