Speaking at the ED’s foundation day event at Bharat Mandapam in New Delhi, Additional Solicitor General (ASG) S V Raju underscored the risks of early arrests under the Prevention of Money Laundering Act (PMLA). Drawing from his courtroom experience in high-profile cases involving the agency, Raju argued that while the power to arrest is crucial, its early exercise often backfires legally and strategically. “Arrest is very crucial for all agencies. But it is the threat of arrest that makes people disclose details in a case. After they are arrested, their conduct changes because the threat is over,” he said.
Raju emphasized the legal requirements under PMLA: authorities must have “grounds of arrest” and “reasons to believe” in the guilt of the accused. Arrests made before gathering these prerequisites, he warned, fail to withstand judicial scrutiny and can weaken the prosecution’s case.
He cited the example of Delhi CM Arvind Kejriwal, who challenged his arrest in the Delhi liquor policy case on similar grounds and was later granted bail.
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Early Arrests Jeopardize Investigations and Risk Default Bail, Says ASG
According to Raju, premature arrests often result in default bail due to incomplete investigations and the inability to file charges within the 60-day window. “Even the worst of offenders may walk free because of procedural missteps,” he cautioned.
He also pointed to Section 50 of the PMLA, which allows admissible statements to be recorded during investigation. Once a suspect is arrested, the evidentiary value of these statements becomes questionable. “Statements recorded under Section 50 are admissible. But if a person is arrested, the statement becomes vulnerable,” Raju explained.
He urged the agency to follow due process and gather sufficient evidence before exercising arrest powers, asserting that late arrests tend to receive a better reception from the judiciary and improve conviction chances. Raju further recommended that the ED should charge not only individuals but also the companies they manage. Citing Supreme Court judgments, he clarified that vicarious liability of corporate officers is valid only when the company itself is found culpable.
ED Director Highlights Surge in Convictions, Vows Faster Investigations
Enforcement Directorate Director Rahul Navin addressed the need for faster resolution of cases, acknowledging that long-pending PMLA probes diminish the agency’s deterrent value. “We acknowledge candidly that several PMLA investigations are pending for a very long time,” he said, adding that expediting final prosecution complaints and asset confiscation requests will be a key focus.
Contrary to public perception, Navin said ED boasts a conviction rate of over 93%. He detailed the agency’s progress since 2014, noting a sharp rise in both the volume and value of investigations:
From 2005 to 2014, only around 200 cases were registered annually, mostly drug-related.
From 2014 to 2024, 5,113 new PMLA investigations were initiated.
In FY 2024–25, 775 new cases, 333 prosecution complaints, and 34 convictions were reported.
ED issued 461 provisional attachment orders worth ₹30,036 crore—a 141% increase in value over the previous year.
As of March 31, 2025, total assets under provisional attachment stood at ₹1.54 lakh crore.
Navin said these numbers reflect the agency’s strengthened resolve, though improvement in pace remains necessary to ensure public confidence and judicial support.
Raju Recommends Reforms: Crypto, Hawala, and Property Seizure Under Lens
Raju also called for key reforms in PMLA’s implementation. He urged amendments to provisions governing the possession of attached property, which he believes currently hinder effective recovery and enforcement.
On emerging financial threats, he emphasized the need for regulation of cryptocurrencies and hawala operators, warning that both are increasingly exploited for laundering illicit funds. “Cryptocurrency must not be used for money laundering,” he stressed.
He proposed that hawala operators should not necessarily be treated as accused but rather be classified as reporting entities, similar to banks and other financial intermediaries. “They must identify and verify their clients and maintain transaction records,” he suggested, advocating for legislative changes to bring them under the regulatory framework.