What’s in today’s article?

• Why in the News?
• About Prevention of Money Laundering Act, 2002
• Major Provisions of the Act
• Section 45 of the PMLA
• News Summary

Why in the News?

• The Supreme Court has highlighted that sickness and infirmity of an accused are grounds for bail even under the Prevention of Money Laundering Act (PMLA).

About Prevention of Money Laundering Act, 2002

• The Prevention of Money Laundering Act (PMLA), 2002 was enacted in January, 2003.
• The Act seeks to combat money laundering in India and has three main objectives:
  • To prevent and control money laundering
  • To confiscate and seize the property obtained from the laundered money; and
  • To deal with any other issue connected with money laundering in India.
• Sec. 3 of the Act defines offence of money laundering as:
  • whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering.
• The Act was amended by the Prevention of Money Laundering (Amendment) Act, 2009 and by the Prevention of Money Laundering (Amendment) Act, 2012.

Major Provisions of the Act

• The Act prescribes obligation of banking companies, financial institutions and intermediaries for verification and maintenance of records of the identity of all its clients and also of all transactions.
• PMLA empowers the Directorate of Enforcement (ED) to carry out investigations in cases involving offence of money laundering and also to attach the property involved in money laundering.
  • ED is a law enforcement agency and economic intelligence agency responsible for enforcing economic laws and fighting economic crime in India.
  • It was formed as an Enforcement Unit, in the Department of Economic Affairs, for handling Exchange Control Laws violations under Foreign Exchange Regulation Act, 1947.
• PMLA envisages setting up of an Adjudicating Authority to exercise jurisdiction, power and authority conferred by it essentially to confirm attachment or order confiscation of attached properties. 
• It also envisages setting up of an Appellate Tribunal to hear appeals against the order of the Adjudicating Authority
• PMLA envisages designation of one or more courts of sessions as Special Court or Special Courts to try the offences punishable under the Act.
• PMLA also allows Central Government to enter into an agreement with Government of any country outside India for enforcing the provisions of the PMLA.

Section 45 of the PMLA

• Section 45 of the Act, deals with the bail provisions related to money laundering offenses in India.
• This section places stringent conditions on the granting of bail to individuals accused of money laundering, making it one of the more controversial aspects of the PMLA.
• Twin Conditions for Bail: Under Section 45(1) of the PMLA, before granting bail to a person accused of money laundering, the court must be satisfied of two conditions:
  • Prima Facie Innocence: The court should have reasonable grounds to believe that the accused is not guilty of the offense.
  • No Risk of Tampering: The court should be convinced that the accused is not likely to commit any offense if released on bail.
• Non-Bailable Offenses: Offenses under the PMLA are considered non-bailable. This means that the court has discretionary powers in granting bail, and bail is not an automatic right for the accused.
• Amendments and Court Rulings: The stringent nature of Section 45 has led to several challenges in court, with arguments that it violates the right to personal liberty.
• The Supreme Court, in Nikesh Tarachand Shah v. Union of India (2017), struck down the twin conditions as unconstitutional, but they were reintroduced through amendments to the PMLA in 2018.

News Summary

• The Supreme Court of India has underscored that illness and frailty of an accused can be valid grounds for granting bail under the Prevention of Money Laundering Act (PMLA).
• In a recent ruling, a three-judge Bench led by Chief Justice D.Y. Chandrachud granted interim bail to Amar Sadhuram Mulchandani, former chairperson of Seva Vikas Co-operative Bank, due to his severe health issues.
• Section 45 of the PMLA generally imposes stringent conditions for bail, requiring courts to believe the accused is likely innocent and unlikely to re-offend.
• However, a proviso in Section 45(1) allows the court discretion to exempt minors, women, the sick, and infirm individuals from these conditions.
• The court highlighted this humane provision, noting Mulchandani’s deteriorating health, including cardiac and kidney issues, as well as diabetes and hypertension, as sufficient grounds for bail.

Q1. What is Money Laundering?

Money laundering is the process of illegally concealing the origin of money obtained from illicit activities such as drug trafficking, underground sex work, terrorism, corruption, embezzlement, and gambling, and converting the funds into a seemingly legitimate source, usually through a front organization.

Q2. What is Hawala?

Hawala is an informal funds transfer system that allows for the shifting of money from one person to another without the actual movement of money. It is a simple process that requires no documentation and, therefore, is an anonymous system of moving money.

News: Sickness, infirmity are grounds for bail in PMLA case: SC order

What’s in today’s article?

• Why in News?
• What are Economic sanctions?
• Indian Firms and Nationals sanctioned
• Possible Impact on India

Why in News?

The U.S. recently sanctioned around 400 entities and individuals, including 19 Indian firms and two Indian nationals, over links to Russia’s war efforts in Ukraine.

Sanctions typically restrict trade, investment, and financial transactions with targeted entities, aiming to curb their economic and operational activities by cutting off access to U.S.-based resources and systems.

For firms, this can mean being barred from the U.S. market, losing American partners, and facing significant financial and operational limitations, potentially affecting global trade and their business operations.

What are Economic sanctions?

• Understanding Sanctions
  • Sanctions aim to restrict or end economic ties between the sanctioning entity and the target, taking forms such as import/export bans, trade restrictions, asset freezes, and exclusion from banking systems.
  • Sanctions may be:
    • Comprehensive: Affecting entire countries, such as the U.S. embargo on Cuba.
    • Targeted: Directed at specific entities, groups, or individuals, as with U.S. sanctions on Russian firms.
• Global Mechanisms for Sanctions
  • Sanctions are imposed by individual countries, such as the U.S. on nations like Iran, North Korea, and Russia, which has become the world’s most sanctioned country post-Ukraine war.
  • International bodies like the UN (through its Security Council) and the EU also have mechanisms to impose sanctions.
• Efficacy and Criticisms of Sanctions
  • While intended to apply economic pressure, the effectiveness of sanctions is debated.
  • Targets can find ways to bypass restrictions, and enforcing sanctions can impact both the sanctioning country and its industries reliant on sanctioned imports.
  • For instance, despite extensive Western sanctions, Russia’s economy remains resilient with ongoing trade with countries like India and China.
  • The UN lacks direct enforcement powers, relying on member nations for implementation.

Indian Firms and Nationals sanctioned

• The United States has imposed sanctions on 19 Indian firms and two Indian nationals for providing critical components to Russian companies linked to the defense sector.
• These sanctions restrict trade and financial dealings with these firms and individuals.
• Companies sanctioned – few examples
  • Ascend Aviation India Private Limited:
    • Shipped over 700 items valued above $200,000, including U.S.-origin aircraft parts from the Common High Priority List (CHPL), to Russian companies from March 2023 to March 2024.
    • Working with the European Union, Japan, and the United Kingdom, Bureau of Industry and Security (BIS) has developed the CHPL.
    • CHPL includes 50 items that Russia seeks to procure for its weapons programs.
  • Mask Trans
    • Supplied more than $300,000 worth of CHPL-listed aviation components to Russia’s S7 ENGINEERING LLC between June 2023 and April 2024.
  • TSMD Global Private Limited
    • Exported CHPL items worth at least $430,000, such as integrated circuits and CPUs, to Russian firms from July 2023 to March 2024.
  • Futrevo
    • Provided over $1.4 million worth of CHPL-listed electronic components to SMT-ILOGIC, a manufacturer of Orlan drones, between January 2023 and February 2024.
• Individuals sanctioned
  • The directors of Ascend Aviation India, Vivek Kumar Mishra and Sudhir Kumar, were also sanctioned

Possible Impact on India

• Impact on Indian Defence Sector
  • The U.S. sanctions, aimed at restricting supply of dual-use items to Russia, are expected to have minimal impact on India’s defense ecosystem.
  • Most sanctioned companies have no significant ties to major defense projects, with only RRG Engineering involved in limited work with the DRDO and the Indian armed forces.
• Trading Activities and Foreign Connections
  • Many of the sanctioned entities appear to be engaged in trading, importing Western electronics for resale to sanctioned Russian companies. For example:
• Denvas Services: Supplies digital kiosks and has Russian nationals among its directors and shareholders. It has been accused of procuring U.S.-origin microelectronics for Russia's conventional weapons.
• RRG Engineering: The only company with limited defense ties, accused of sending microelectronics to Russia-based Arteks Limited Company. It has previously supported DRDO projects with manpower and provided non-critical supplies like NBC warfare detectors and satcom stations.
• Availability of Equipment in India
  • Industry experts believe the sanctioned equipment, such as microelectronics and NBC detectors, is easily available within India and can be sourced when required, mitigating potential disruptions from these sanctions.

Q.1. What prompted the recent US sanctions against Indian firms?

Answer: The US imposed sanctions on 19 Indian firms and two individuals due to their links in supplying critical components to Russian companies involved in defense efforts related to the Ukraine war.

Q.2. What is the potential impact of these sanctions on India’s defense sector?

Answer: The impact is expected to be minimal, as most sanctioned companies lack significant ties to major defense projects, with only one firm having limited involvement with Indian defense agencies.

News: US sanctions Indian firms, people amid Russia Ukraine war: Why, what exactly are sanctions | Economic Times | Indian Express

 What’s in today’s article?

• Why in News?
• What is AQI?
• Reasons behind low pollution level in Delhi after Diwali

Why in News?

Delhi’s 24-hour average air quality before and during Diwali this year was worse than the past two years. However, the day after Diwali saw an improvement in pollution levels, marking the lowest post-Diwali AQI since 2015, except for 2022.

The post-Diwali AQI on Friday was 339, an improvement from 358 the previous year. The worst post-Diwali air quality in recent years was in 2021, with an AQI of 462.

What is Air Quality Index (AQI)?

• Introduction to AQI
  • The AQI was launched by the Indian government in 2014 as part of the Swachh Bharat campaign to provide a simplified understanding of air pollution.
  • An expert group, including medical professionals and air quality experts, collaborated with IIT Kanpur to develop the AQI scheme.
• How AQI is Calculated
  • The AQI transforms complex data on various pollutants into a single numerical value and color code.
  • The pollutants measured include PM10, PM2.5, Nitrogen Dioxide, Ozone, and Carbon Monoxide.
  • Each pollutant is assigned a weight based on its health impact, and the worst-weighted pollutant determines the composite air quality, yielding a single AQI value instead of multiple readings.
• Impact of Harmful Pollutants
  • Particulate matter, especially PM2.5 (particles smaller than 2.5 micrometers), poses significant health risks.
  • Due to their minuscule size, PM2.5 particles can enter the respiratory system and bloodstream, leading to serious health issues such as asthma, heart attacks, and other chronic respiratory conditions.
• Influence of AQI on Government Policy
  • Governments utilize AQI data to implement measures aimed at improving air quality.
  • In regions like Delhi, the Graded Response Action Plan (GRAP) is activated in response to deteriorating air quality.
  • This plan may lead to bans on coal and firewood use, restrictions on diesel generators, and increased parking fees to reduce private vehicle usage, thereby mitigating pollution.

Reasons behind low pollution level in Delhi after Diwali

• Warmer Temperatures
  • This year, Delhi experienced the warmest October in 73 years, with average temperatures of 35.1°C (maximum) and 21.2°C (minimum).
• In contrast, Diwali last year took place in November, with cooler temperatures averaging 27.8°C and 13°C.
  • Cooler weather typically worsens pollution due to a lower inversion height, which traps pollutants closer to the ground.
• A temperature inversion is a layer in the atmosphere where the temperature increases with height, which is the opposite of normal behavior. 
• This happens when air near the ground cools faster than the air above it.
  • The warmer October temperatures this year helped reduce pollution dispersion, contributing to relatively improved air quality post-Diwali despite higher pollution levels on the festival day.
• As temperature dips, the inversion height — which is the layer beyond which pollutants cannot disperse into the upper layer of the atmosphere — is lowered.
• The concentration of air pollutants increases when this happens.
• Strong winds
  • High wind speeds significantly improved the dispersal of pollution in Delhi following Diwali.
  • The India Meteorological Department (IMD) reported westerly winds starting at 3-7 kmph early Friday, increasing to 10 kmph by 9 AM and reaching 15 kmph by noon.
• This wind speed aided in reducing levels of PM2.5 and PM10, which had spiked due to firecracker use and stubble burning in nearby states.
  • Despite air quality remaining 'poor' to 'very poor' throughout Diwali, these wind conditions ultimately facilitated a reduction in pollution levels the following day.

Q.1. What factors contributed to improved air quality in Delhi after Diwali this year?

Answer: Improved air quality was due to warmer temperatures in October, reducing pollution dispersion, and strong winds that aided in dispersing pollutants, resulting in a lower post-Diwali AQI compared to previous years.

Q.2. How is the Air Quality Index (AQI) calculated?

Answer: The AQI simplifies complex air quality data into a single value, weighing pollutants like PM2.5 and PM10 based on health impacts. The worst-weighted pollutant determines the overall AQI, providing a clear indication of air quality.

News: Warmer, windier: why post-Diwali Delhi air was cleaner this year | Indian Express | Financial Express