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No need for money laundering act, says Assocham

The government should reverse its decision on introducing the money laundering act as it is against the interests of the business community, the Associated Chambers of commerce and industry of India said on Sunday.

"At a time when the government is talking about removing the several legislations which are hampering the growth of trade and industry in the country, the introduction of the money laundering act will be a step in the wrong direction," said Anil K Agarwal, chairman of the chamber's expert group on the Foreign Exchange Regulation Act, the Foreign Exchange Management Act, and the money laundering act.

The money laundering bill, likely to be introduced in the coming session of Parliament, has incorporated several offences under the Indian Penal Code, the Prevention of Corruption Act, the Narcotic Drugs and Psychotropic Substances Act, and FERA.

"In fact, clauses deleted from FERA and not included in FEMA have been placed in the money laundering bill and more harshly. This proves that the entire exercise of replacing FERA with FEMA was a mere eyewash," Agarwal said.

"There is no need for the money laundering act because all the clauses in this act are already covered under other acts. So we can as well do without it," he added.

In fact, unlike the penal code, this act requires the accused to prove himself innocent. "Therefore, the accused would have to prove that his properties have not been acquired illegally. This clause has been placed to unnecessarily harass people," Agarwal alleged.

Moreover, in the money laundering act, statements made before officers would be admissible in the court as evidence. Besides, offences under the penal code ranging from waging war against the state, extortion, murder, homicide, robbery, dacoity, kidnapping, and even theft have been incorporated in the bill.

The bill also provides for an adjudicating authority,who can issue showcause notices if it is reasonably believed that any person has contravened provisions of the act. Such an authority would have more power than the Supreme Court, he claimed.

Agarwal said under this act, property can be confiscated with reasonable belief that it has been earned by activities violating the act. Such a confiscation cannot be reversed even if the person is exonerated by the court. This clause would unnecessarily harass a person and cause irreparable damage to his business, he added.

Agarwal said the money laundering bill must be thoroughly debated and views of the business community sought before introducing it in Parliament.

The bill, he alleged, is being introduced at the instance of certain superpowers. "Once this act is passed, our economic sovereignty will be at stake," he claimed.

Unlike the NDPS Act, the maximum punishment prescribed under the money laundering act is 10 years and the minimum, three years. No prosecution can, however, be launched against any offender without the prior sanction of director of the agency enforcing the act. If a person is acquitted, he cannot claim damages, the expert said.

The bill further provides that no appeal against an order of the special court can be taken up by the high court if such an appeal is made after the expiry of 60 days of the decision or order of the special court.

The act also empowers a person above the rank of an investigating officer to conduct a search, seize documents, break open locks, safes, and to record statements.

Agarwal said the act will be misused by the officers as they do not need evidence to arrest a person. "They can merely say that they have reasons to believe that the person is into money laundering and put him behind bars. This way, officers will end up extorting money," he alleged.

UNI