Concern Over Laundering Bill Provisions

Federation of Indian Chambers of Commerce & Industry (Ficci) has shown concern over some of the provisions of the Money Laundering Bill, expressing fear that it might become the linchpin of potential harassment in the next decade.

Ficci has written to Union finance minister Yashwant Sinha, discussing the intricacies of the Bill and its impact.

Ficci president K K Modi pointed out that the proposed Prevention of Money Laundering Bill equips the government with sweeping powers to prosecute and attach the property of anyone directly or indirectly engaged in money laundering.

Offences under this have been made non-bailable and punishable with rigorous imprisonment up to seven years. The Bill proposes that the director, deputy director or any other authorised officer of the new directorate would be empowered to arrest a person if there is reason to believe that the person is guilty under the Act. It is also proposed that no civil court may intervene in ongoing cases.

The proposed Bill, said Modi, would contradict the finance ministry's fundamental purpose of preventing harassment of entrepreneurs through committees set up to eradicate inspector raj and simplify the excise laws.

According to Modi, Ficci had earlier, in numerous papers, pointed out that the Money Laundering Bill should cover only criminal activities and offences under drug trafficking, narcotics and Immoral Traffic Prevention Act.

While agreeing that criminalisation in the economy has increased and needs to be tackled on a war footing, Modi said there was no need to place issues like falsification of accounts under Section 477A of the Indian Penal Code.

He emphasised that this would lead to duplication of existing laws as there was no framework to prevent agencies implementing penal provisions under the Bill from stepping into the area covered by the Companies Act and Income Tax Act. This could create further confusion leading to more harassment.

He said the powers vested in officers would enable them to arrest a person simply on suspicion and his or her property would be attached till the case is under legal jurisdiction. This, he says, is illogical since the onus of proof should lie on the prosecuting agencies. Modi has also said that the stipulated transaction limit of Rs 25 lakh, beyond which financial institutions or intermediaries have to maintain a record, is too low and should be raised to Rs 3 crore.