SC ruling paves way for ED to attach assets, conduct raids prior to predicate offence: Ex ED chief

The recent Supreme Court verdict clarifying various provisions of the PMLA ”strengthens” the hands of the Enforcement Directorate (ED) as the agency can now attach assets and carry out raids even before the registration of the predicate offence, former ED Director Karnal Singh has said.

The apex court on July 27 issued its directives in a 545-page order after hearing a clutch of pleas concerning the validity and interpretation of several provisions of the Prevention of Money Laundering Act (PMLA) and the procedure followed by the ED while investigating cases under this stringent criminal law.

Singh, a 1984-batch Indian Police Service (IPS) officer, retired as the ED chief in 2018 after heading the federal agency for over three years.

Explaining the order, the former ED chief said while the SC verdict gives a shot in the arm to the agency, in a few instances, it also brings more accountability upon the investigators to conduct due diligence before going ahead in a case.

”The SC order, at some places, strengthens the hands (of the ED) like it says that the attachment of the property can be done even without the predicate (primary) offence being there if the ED officer is satisfied that there exists a predicate offence, there are proceeds of crime which could deplete or go away if not attached immediately and frustrate proceedings under the PMLA.” ”However, at the time of attachment, the ED officer should also write a letter to the predicate agency giving all the evidence to them so that the predicate agency (like CBI, police etc) can take cognisance of it, register a case and give the copy of FIR or if it is an agency where FIR is not registered then inform the ED about the concept that they are going to investigate that…,” Singh told PTI in an interview.

Secondly, he said, the court order clarifies that searches can be undertaken by the ED without the predicate offence being booked. ”The officers, however, will have to be careful what happens if the other agencies do not register a case. What happens if the evidence is not good which can lead to the predicate offence not being successful? If you see the judgement, it says that if the predicate offence fails then there is no PMLA offence and therefore ultimately in the final decision the legs of the two agencies (ED and the predicate offence filing agency) have been tied.” ”The sense is that ED will be successful only when the predicate agency is successful. Even if you attach the property, even if you prosecute, if the predicate offence falls then what happens?” he said.

The former ED Director says that the SC order can be seen as a directive that gives ”clarity” to ED officers, courts and advocates about the meaning of various sections of the anti-money laundering law and therefore its ”implementation will be smoother than it was previously.” ED officers will have to be ”careful” because if the other agency does not register a case then what happens to their investigation, what happens to the attachment, what happens to the search?” ”They all become null…so they (ED investigators) will have to have self-control, there has to be some checks and balances within the department so that in such cases where there is no predicate offence already registered, the senior officers (of the ED) should look into it before the investigation is taken up in such cases,” he said.

Singh also dismissed charges made by political parties and others that the ED had a very poor conviction rate.

The latest Parliament data said there were 23 convictions secured by the ED under the PMLA over 17 years of its journey (since 2005).

”We have to understand what is a conviction rate. It is based on the number of cases decided against the number of cases successful. It is not the number of cases sent to the court and the number of cases that resulted in a conviction. That difference has to be understood.” ”Conviction rate will be calculated like in how many cases there was a conviction divided by how many cases were decided. In this data (Parliament) there is no mention of the number of cases decided. From my experience and talking to ED officers, I understand there are hardly 2-3 cases where there has been acquittal and that acquittal happened as the predicate offence failed. That is not the fault of the ED.” ”It is in 17 cases where the conviction has taken place and 23 is the number of persons convicted. So, if you take around 19-20 cases decided, the conviction rate will come out to be around 90 per cent and that is a pretty good conviction rate,” Singh said.

He said the conviction rate of other probe agencies hovers around 40 per cent and hence ”in that way, I will say these are wrong allegations against ED.” Without understanding what conviction rate is, you cannot have your definition of conviction rate and make allegations against the ED, he said.

”The process of trial is long drawn out in our country. I would say it is not the fault of judges, not the fault of ED but the tactics used by various people including advocates who take adjournments, again and again, delaying the trial of the case,” he said.

Singh said the process of evidence in money laundering cases runs into thousands of pages and that they have to be proved in a court of law, the magistrate has to apply his mind going through those financial transactions, the criminal acts how the money laundering is taking place. I would say that there would be an improvement (after the SC order) but one has to see how the changes will come, he said.