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Our Economic Bureau
New Delhi, Nov 11: The finance ministry is planning to considerably soften and finetune certain crucial provisions of the prevention of money laundering bill (PMLB) and foreign exchange management bill (Fema) to offset the fears expressed by the industry. The scope of PMLB is likely to be limited to heinous crimes and a "sunset clause" is being considered to deal with cases being pursued under outgoing FERA.
An indication to this effect was given by revenue secretary Javed Choudhury, while addressing a seminar on the subject organised by the Ficci here on Wednesday.
The revenue secretary said that the consensus in the finance ministry was that the scope of the PMLB should be, "confined to such crimes as would come under the category of heinous crimes like the Narcotics and Psychotropic Substances Act 1995; the Immoral Traffic (prevention) Act 1956 and sections 121 and 121 A of IPC dealing with treasonable actions."
Much to the comfort of the industry, he said the ministry was of the view that "it wouldbe excessive to extend such a tough law to various common offences which cover falsification of accounts, forgery of valuable securities, use of counterfeit currency notes and provisions relating to illegal gratification and influencing of public servants under the Prevention of Corruption Act 1988."
As far as the cases which were being pursued under FERA were concerned, the industry wanted that the pending ones be either dropped or tried in accordance with the provisions of the FEMA. However, the view was not acceptable to the ministry. Choudhury said that the ministry was in favour of a "sunset clause" in the FEMA.
He added that, "such a provision could either be to the effect that offences under repealed FERA could be investigated for a maximum period after repeal of the law, or that, only such offences be investigated under FERA as had been registered prior to the repeal of FERA."
He expressed the inability of the government to accept the suggestion of FICCI that all offences committed during thevalidity of FERA be withdrawn as it would, "amount to undermining the very foundation of our concept of the rule of law." He also recalled that when TADA was repealed, the proceedings which had been initiated initially, continued.
The two bills, it might be mentioned, were currently with the Parliamentary Standing Committee and the revenue secretary said that the government would have an open mind on the provisions of the Bill and would take into consideration various suggestions of the committee and trade and industry before enacting the law.
Another important change being contemplated by the government with regard to PMLB relates to provision requiring that transactions in excess of Rs 25 lakhs be compulsorily reported to the income tax department by the banks etc. Even RBI had criticised the provisions. The ministry, revenue secretary said, was of the view that the threshold limit was too low and would generate a flood of reports which might not be of use to the investigating agency.
He said that thegeneral thinking in the ministry was that the bill might provide an enabling provisions, both in respect of transactions through instruments and cash. "The clause may also provide that the threshold limit may be notified by government," he said.
In the initial stage, Choudhury said, the government could consider only cash transactions above, "a threshold of say Rs 1 crore."
He further said that the clause 3(b) of the PMLB be suitably modified so as to protect an innocent persons, who might unknowingly enter into any transaction which was related to the proceeds of crime, either directly or indirectly. He said that words, "anyone who knowingly and willingly enters into a transaction" be suitably incorporated in the PMLB.
The revenue secretary also said that the definition of "resident in India" would be made more unambiguous. Responding to criticism of in this regard, he said "it would be better to relate the residential status depending on whether or not, he has resided for more than 182 days in theprevious calender/financial year." On this basis, he added, "for the following calender/financial year the individual can be treated as a resident or non-resident." Referring to complex issue of compounding of offences and discretionary powers of enforcement officials, Choudhury said that the problem would be solved to a great extent by the government giving "detailed guidelines for the compounding of offences, so that the enforcement officials cannot have a very wide discretion in the course of many of their decisions."
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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