Money laundering

Story hook

It is 27 July 2022. The Supreme Court bench of Justices A.M. Khanwilkar, Dinesh Maheshwari and C.T. Ravikumar delivers the 545-page Vijay Madanlal Choudhary judgement in Vijay Madanlal Choudhary v. Union of India. After 241 petitions and 3 years of hearings, the court upholds the Prevention of Money Laundering Act 2002 (PMLA) in nearly all its severe contours — Section 5 attachment, Section 17 search and seizure, Section 19 arrest, Section 24 reverse burden of proof, Section 45 twin conditions for bail, and the ED's constitutional position.

The numbers behind the case are sobering. The ED has filed 5,906 ECIRs (Enforcement Case Information Reports) between 2014 and March 2022. Attachment orders worth Rs. 1,04,702 crore. Trial completed in 24 cases with 23 convictions. Conviction rate: ~96% where trial concluded — but trial completion is the bottleneck. Bail rate under PMLA: less than 25%, against ~80% for IPC offences. Politicians have called the ED a "weaponised agency"; the agency calls itself an "institutional arm of the FATF compliance regime".

The Financial Action Task Force (FATF) — created by G7 in Paris in 1989 — has its 40-recommendation framework woven through every Indian AML/CFT statute. India became a full member in June 2010. The next FATF mutual evaluation of India in September 2024 scored India in the regular follow-up category — the best outcome among major economies — with high compliance ratings on terror financing, money laundering, and financial intelligence.

For UPSC, money laundering is the operational core of GS-III Internal Security. It bridges economy, security, foreign policy, and law. Examiners ask it nearly every year because India's AML/ CFT regime is one of the most actively evolving statutory areas in the country.

Why this matters for UPSC

Asked in Mains 2018, 2019, 2020, 2021, 2023 in different framings. Prelims tests FATF, PMLA sections, ED, FIU-IND, Egmont Group facts almost annually. Interview boards probe ED's constitutional balance, Vijay Madanlal verdict, FATF mutual evaluation outcomes. The topic touches integrity, federalism, and rule of law — board favourites.