Prevention of Money Laundering Act, 2002
Attachment, Seizure, Freezing and Confiscation Distinguished
The PMLA gives the authorities four ways of acting on property, and they are easily confused. Provisional attachment stops dealing while the owner keeps the property. Freezing does the same where seizure is impractical, usually for accounts. Seizure takes physical custody during a search. Confiscation ends ownership altogether, and only a court can order it after trial. The first three are interim and must be confirmed; the last is final. This note compares them.
The four measures compared across eight points, from least intrusive to final
1. The Four Measures Compared
Basis | Provisional attachment | Freezing | Seizure | Confiscation |
|---|---|---|---|---|
Section | s. 5 | s. 17(1A) | ss. 17, 18 | s. 8(5), (7) |
Who orders | Director or Deputy Director | The officer during search | The officer during search | The Special Court |
Trigger | Reason to believe, recorded | Seizure not practicable | Search or survey | Conviction, or s. 8(7) |
Effect | No transfer or dealing | No dealing | Physical custody | Title passes to the Government |
Possession | Stays with the owner | Stays with the owner or bank | With the ED | With the Government |
Next step | Complaint to AA within 30 days | Application to AA within 30 days | Application to AA within 30 days | Vesting under s. 9 |
Duration | 180 days; if confirmed, per s. 8(3) | Until the AA decides | Retention under ss. 20, 21 | Permanent |
Nature | Interim, protective | Interim, protective | Interim, evidentiary | Final |
2. Attachment and Seizure
§ Custody versus restraint • Attachment restrains dealing; the owner keeps possession, and may even enjoy attached immovable property under Section 5(4). • Seizure takes physical custody of property or records during a search under Section 17 or a search of a person under Section 18. • Both are interim. A seizure must be followed by an application to the Adjudicating Authority within thirty days under Section 17(4), and retention beyond the statutory period needs the Authority's order. • Purpose differs. Attachment preserves value for confiscation; seizure also secures evidence. |
3. Attachment and Confiscation
§ Interim versus final • Attachment is made by an officer, on reasonable belief, before any finding of guilt; it is confirmed by the Adjudicating Authority, an administrative-judicial body. • Confiscation is ordered by the Special Court under Section 8(5) only after it finds that money laundering was committed, or under Section 8(7) where trial cannot be held because of death, absconding or similar reasons. • Attachment becomes confiscation only through that order; on acquittal, the property is released under Section 8(6). • Vesting. On confiscation, all rights and title vest in the Central Government under Section 9, and an Administrator manages the property under Section 10. |
4. Provisional Attachment and Freezing
§ Two restraints, two procedures Freezing under Section 17(1A) is available during a search where it is not practicable to seize a record or property, such as a bank account; the officer may make an order that the property shall not be transferred or otherwise dealt with without prior permission. Provisional attachment under Section 5 stands on its own, and is not tied to a search. Both lead to the Adjudicating Authority: a freezing order through an application under Section 17(4); an attachment through a complaint under Section 5(5). Strict procedure. In Opto Circuit India Ltd. v. Axis Bank, (2021) 6 SCC 707, the Supreme Court set aside a direction to freeze bank accounts issued without following Section 17, including the required authorisation and recorded reasons, holding that the procedure prescribed by the statute must be strictly observed. |
5. Frequently Asked Questions
What is the difference between attachment and seizure?
Attachment prohibits dealing with property while the owner keeps it; seizure takes physical custody during a search. Both are interim and must be confirmed by the Adjudicating Authority.
What is the difference between attachment and confiscation?
Attachment is an interim restraint by the ED, confirmed by the Adjudicating Authority; confiscation is a final order of the Special Court after trial, vesting the property in the Central Government.
When is freezing used instead of seizure?
Under Section 17(1A), where it is not practicable to seize the property during a search, such as a bank account.