Section 20 of PMLA : Section 20: Retention Of Property

Explanation using Example

Let's consider a hypothetical scenario where the Enforcement Directorate (ED) suspects that Mr. X, a businessman, is involved in a money-laundering operation. During their investigation, they seize a luxury car and freeze his bank account, suspecting these assets to be proceeds of the crime.

The officer authorized by the Director of ED believes that the car and the funds in the bank account are necessary for the ongoing adjudication process. He records his belief in writing and decides to retain the car and continue the freeze on the bank account.

According to Section 20 of The Prevention of Money-Laundering Act, 2002, the officer can retain the car and keep the bank account frozen for up to 180 days from the day of seizure and freezing. During this period, the officer sends all relevant materials and the order for retention to the Adjudicating Authority for review.

If, after 180 days, the adjudication process is not complete, the Adjudicating Authority needs to be convinced that the assets are indeed involved in money-laundering to allow for an extension of the retention or freeze.

Suppose the Special Court later finds that the car was not involved in money-laundering but the bank account was. In that case, the court will order the release of the car to Mr. X, while the funds in the bank account may be confiscated.

If there is an appeal against the release order, the Director of ED can withhold the release of the car for 90 days, pending the appeal process.