Historical Context

The history of the PMLA can be traced back to the later part of the 1980s, when an urgent need was felt among various nations to protect their financial systems from money-laundering. In 1990, the United Nations General Assembly[2] called upon its member nations to develop mechanisms to prevent financial institutions from crumbling due to money-laundering, and to achieve the same by enacting laws in the respective countries. Eventually, in 1998, the United Nations in the ‘Special Session on Countering World Drug Problem Together’ passed a declaration on the need to combat money-laundering, to which India is a signatory.

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India’s international commitment to combat money-laundering forms the basis of the legislative intent behind the enactment of the PMLA which came into force on 01 July 2005. This is reflected in the statutes’ preamble, and in the SC’s interpretation of the provisions under PMLA in the Judgment.