🌐 Introduction

The Prevention of Money Laundering Act (PMLA), 2002 lays down a clear adjudication process under Section 8 to determine whether property is involved in money laundering. The Adjudicating Authority (AA) is entrusted with the responsibility of ensuring fair hearings, deciding on provisional attachments, and ordering confiscation or release of properties. This process strengthens India’s fight against financial crimes while safeguarding the rights of individuals.

1. Initiation of Adjudication

📌 When it starts: Adjudication begins on receipt of:

• Complaint under Section 5(5) (Provisional Attachment)
• Applications under Section 17(4) (Search & Seizure)
• Applications under Section 18(10) (Personal Search)

📜 Notice to the person:

• A notice of at least 30 days is issued to the person whose property is attached, seized, or frozen.
• The person must provide:

• Sources of income
• Evidence supporting ownership
• Other relevant details

👥 Joint or Proxy Ownership:

• If property is held on behalf of someone else, notice is also sent to that person.
• If property is held jointly, all co-owners are served. 

💡 Example:

A flat purchased in the name of Person A but funded by Person B will require notices to both parties.

2. Consideration and Hearing

 The AA considers:

• 📄 Reply to the notice
• 🗣️ Oral or written arguments of the aggrieved person and the Director/authorised officer
• 📂 Supporting evidence and documents
• 👩‍⚖️ Opportunity for others:
• If another person claims the property, they must be heard to prove it is not involved in laundering. 

💡 Example: If a bank account is attached, the account holder can present proof that the funds are legitimate.

3. Findings of the Adjudicating Authority

🔒If the AA determines that property is involved in money laundering:

• Attachment or seizure continues during investigation (up to 365 days) or until the proceedings are completed in India or abroad.
• After confirmation by a Special Court, the attachment becomes final.

⏳Exclusion:

• Any period during which the investigation is stayed by a court is not counted in the 365-day limit.

💡Example:

If a luxury car is provisionally attached, the AA may confirm the attachment for investigation and pending trial in a Special Court.

4. Possession after Confirmation

Once the AA confirms the attachment, the Director or authorised officer must:

• 🏠Take possession of the property
• 🏦If taking physical possession is impractical (e.g., frozen accounts), the confiscation order has the same effect

💡Example:

A frozen bank account cannot be physically possessed, but the person cannot access the funds until adjudication is complete.

5. Role of the Special Court

⚖️If money laundering is proven:

• Property used in the offence is confiscated to the Central Government.

✔️If no money laundering:

• Property is released to rightful owner.

🛑 Incomplete or interrupted trial:

• If the accused dies, becomes a proclaimed offender, or trial cannot conclude, the Special Court may issue appropriate orders on confiscation or release based on available evidence.

🤝Restoration to legitimate claimants:

• If someone suffered loss in good faith due to the laundering offence, the court may restore property or part of it.
• Claimants must show they:

• Acted in good faith
• Took all reasonable precautions
• Are not involved in money laundering

💡Example:

If property is confiscated, but a family member who was unaware of its criminal origin suffered a loss, the court can restore it to them.

6. Vesting of Property in Central Government

🏛️ Once confiscated : All rights and title of the property vest absolutely in the Central Government, free from encumbrances.

🚫Exceptions:

• If any encumbrance or lease-hold interest was created to defeat the Act, it can be declared void.
• Persons remain liable for damages for any prior encumbrances.

 💡Example:

A flat mortgaged to a bank but later confiscated will vest in the government, and any fraudulent lease created to defeat the Act is void.

Summary – Flow of Adjudicating Process

Key Takeaways

1. Adjudicating Authority is the first step in verifying the legality of attached, seized, or frozen property.
2. Natural justice is followed: notice, reply, hearing, and evidence review.
3. Special Court finalizes confiscation or release after trial.
4. Central Government ultimately holds confiscated property, ensuring illegal proceeds cannot be used further.

🏁 Conclusion

Section 8 of the PMLA, 2002 ensures a transparent and balanced adjudication process. From provisional attachment to final confiscation or release, it empowers authorities while safeguarding legitimate rights. By vesting confiscated property in the Central Government and providing opportunities for fair hearing, the law strikes a balance between combating financial crimes and protecting lawful ownership.