Can a Political Party be booked for Money Laundering?
Context:
- The Enforcement Directorate (ED) told the Supreme Court that it is “contemplating” adding the Aam Aadmi Party (AAP) as an accused in its money laundering probe linked to the Delhi government’s now-scrapped excise policy.
What is Money Laundering?
- Money laundering is the illegal process of making large amounts of money generated by criminal activity, such as drug trafficking or terrorist funding, appear to have come from a legitimate source.
- The money from the criminal activity is considered dirty, and the process “launders” it to make it look clean.
- Online banking and cryptocurrencies have made it easier for criminals to transfer and withdraw money without detection.
How Money Laundering Works?
- The process of laundering money typically involves three steps: placement, layering, and integration.
- Placement surreptitiously injects the “dirty money” into the legitimate financial system.
- Layering conceals the source of the money through a series of transactions and bookkeeping tricks.
- In the final step, integration, the now-laundered money is withdrawn from the legitimate account to be used for whatever purposes the criminals have in mind for it.
What is the law under which a political party can be booked for money laundering?
- Section 70 of the stringent Prevention of Money Laundering Act deals with offences by companies.
- While a political party is not a ‘company’ incorporated under the Companies Act, 2013, the provision has a crucial explanation that could bring a political party under the ambit of the anti-money laundering law.
- The phrase ‘association of individuals’ can include a political party.
- A party, according to Section 29A of the Representation of the People Act, is any association or body of individual citizens of India calling itself a political party.
Has a political party ever been booked for money laundering?
- If AAP is directly named as an accused in the excise scam under the PMLA, it would be the first instance of a political party being accused of money laundering.
- However, political parties have been booked and investigated under the Income Tax Act.
- Trusts and NGOs are already under the PMLA ambit.
- In May, the Finance Ministry in a notification included trustees of an express trust also within the PMLA.
Syllabus: Prelims; Polity
