Section 5 of PMLA : Section 5: Attachment Of Property Involved In Money-Laundering

Explanation using Example

Imagine a situation where the Enforcement Directorate (ED) has been investigating a high-profile case of fraud where large sums of money have been illegally obtained by a business tycoon, Mr. X. During the investigation, the ED Director discovers that Mr. X is in possession of a luxury villa which is suspected to be purchased with the proceeds of the crime.

The Director believes that Mr. X may attempt to sell or transfer the villa to a relative to avoid seizure by the authorities. To prevent this, the Director uses the powers granted under Section 5 of the Prevention of Money-Laundering Act, 2002, and provisionally attaches the villa for 180 days, ensuring the property cannot be transferred while the investigation is ongoing.

The Director records the reasons for this belief in writing, as required by the Act, and also ensures that a criminal report has been filed against Mr. X for the underlying scheduled offence. In accordance with the Act, the Director sends a copy of the attachment order and supporting material to the Adjudicating Authority for review.

This provisional attachment gives the authorities time to complete their investigation and potentially initiate the process for permanent confiscation of the property if it is indeed found to have been purchased with the proceeds of crime.