PREVENTION OF MONEY LAUNDERING (ISSUANCE OF PROVISIONAL ATTACHMENT ORDER) RULES, 2013 – AN OVERVIEW

Section 73 of Prevention of Money Laundering Act, 2002 (‘Act’ for short) gives powers to the Central Government in making rules for the purpose of carrying out the provisions of the Act.  By virtue of Section 73(2) (aa) of the Act the Central Government made ‘Prevention of Money Laundering (Issuance of Provisional Attachment Order) Rules, 2013 (‘Rule’ for short) with effect from  19.08.2013.

Section 5(1) of the Act provides for the provisional attachment of property involved in money laundering. According to this section  where the Director, or any other officer not below the rank of Deputy Director authorized by him for the purposes of this section, has reason to believe (the reason for such belief to be recorded in writing), on the basis of material in his possession, that-

• any person is in possession of any proceeds of crime (any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property);
•  such person has been charged of having committed a scheduled offence; and
• such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding ninety days from the date of the order, in the manner provided in the Second Schedule to the Income-tax Act, 1961 (43 of 1961) and the Director or the other office so authorized by him, as the case may be, shall be deemed to be an officer under sub-rule (e) of rule 1 of that Schedule.

No such order of attachment shall be made unless, in relation to an offence under-

•  Paragraph 1 of Part A and Part B of the Schedule, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974); or
• Paragraph 2 of Part A of the Schedule, a police report or a complaint has been filed for taking cognizance of an offence by the Special Court constituted under sub-section (1) of section 36 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985).

Rule 3 provides the manner of issuance of provisional attachment order by the authorities.  If the authorities concerned (Director or any other officer authorized) has reasons to believe on the basis of material in his possession that the proceeds of the crime or the property involved in money-laundering has to be provisionally attached the said officer shall make a provision attachment order.

The authorized officer is to endorse a copy of the said order to all concerned including the persons in possession of the properties and the Adjudicating Authority.  The service of such order shall be served by-

• delivering or tendering to the owner or person; or
• if it cannot be delivered to such owner or person, by delivering it to the person duly authorized by such owner or person; or
• if the owner or person is absent from his residence at the time when service of the order is being effected on him and there is no likelihood of being found at the residence without a reasonable time and he has not duly authorized any person to accept the service on his behalf, service may be made on any adult member in the family of such owner or person who is residing with him; or
• if the service cannot be effected as provided as above the serving officer shall affix one of the duplicate of the provisional attachment order at some conspicuous part of the premises in which the person or owner resides or is known to have last resided or carried on business or personally works or has worked for gain and that the written report thereof shall be witnessed by two parties.

If the said order cannot be served on the above modes, then the authorized officer shall publish it in a leading newspaper, both in vernacular and in English, having wide circulation in the area or jurisdiction in which the person resides or is known to have last resided or carried on business or personally works or last worked for gain.  The same may simultaneously be sent by speed post with proof of delivery at the address of his place of residence or his last known place of residence or the place where he carried on,  or last carried on business or personally works or last worked for gain.

Rule 4 provides for the procedure of service provisional attachment order on corporate bodies, societies and trusts etc.,   In such cases the provisional attachment order shall be effected by serving it on the secretary, local manager or the principal officer of the corporate bodies, societies and trust etc., or by letter sent by speed post addressed to the Chief Officer of such bodies in India, in which case the service shall be deemed to have been effected.  If the service on the above said method cannot be effected the serving officer shall affix one of the duplicate of the provisional attachment order at some conspicuous part of the premises in which the office of the corporate body, society and trust etc., carries on businesses or have last carried on businesses.  As a last resort the order can be published in a leading newspaper, both in vernacular and in English, having wide circulation in the area or jurisdiction where the corporate body, society and trust etc., carries on business or have last carried on business.

Rule 5 provides that if any question arises relating to the interpretation of these rules, the matter shall be referred to Central Government and in regard the decision of the Central Government shall be final.