Prevention of Money Laundering Act, 2002
Search and Seizure: Section 17
Section 17 is the ED's principal power of search. On recorded reasons to believe, it permits entry into any building, place, vessel, vehicle or aircraft, breaking open locks, seizing records and property, examining persons on oath, and, where seizure is impracticable, freezing property such as bank, demat and crypto accounts. Each step is tied to safeguards: recorded reasons, a sealed report to the Adjudicating Authority, and an application for retention within thirty days. This note follows a search from beginning to end.
A search day step by step, what can be frozen, and PMLA search compared with BNSS search
1. The Pre-conditions
§ Section 17(1), in substance Where the Director, or any officer not below the rank of Deputy Director authorised by him, on the basis of information in his possession, has reason to believe, the reasons to be recorded in writing, that any person: (i) has committed any act which constitutes money laundering; (ii) is in possession of any proceeds of crime involved in money laundering; (iii) is in possession of any records relating to money laundering; or (iv) is in possession of any property related to crime, then, subject to the rules, he may authorise any officer subordinate to him to carry out the search. The 2019 change. The proviso that previously required a police report or complaint on the scheduled offence before a search was omitted in 2019. |
2. The Powers
Clause | Power |
|---|---|
s. 17(1)(a) | Enter and search any building, place, vessel, vehicle or aircraft where records or proceeds are reasonably suspected to be kept |
s. 17(1)(b) | Break open the lock of any door, box, locker, safe, almirah or other receptacle where the keys are not available |
s. 17(1)(c) | Seize any record or property found as a result of the search |
s. 17(1)(d) | Place marks of identification on records or property, and make or cause extracts or copies |
s. 17(1)(e) | Make a note or an inventory of the records or property |
s. 17(1)(f) | Examine on oath any person found in possession or control of any record or property, in respect of all matters relevant to the investigation |
3. Freezing Where Seizure Is Impracticable
§ Section 17(1A) • The power. Where it is not practicable to seize a record or property, the officer may make an order to freeze it, so that it is not transferred or otherwise dealt with except with the prior permission of the officer making the order; a copy is served on the person concerned. • Bank accounts. By order to the bank, restraining debits. • Demat accounts. Through the depository participant, restraining transfer of securities. • Virtual digital assets. Exchange balances and hosted wallets, by order to the VDA service provider. • Strict compliance. 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 the statutory authorisation and recorded reasons, holding that Section 17 must be followed strictly. |
4. After the Search
Requirement | Provision |
|---|---|
Forward the reasons and material to the Adjudicating Authority in a sealed envelope, immediately after the search or the freezing order | s. 17(2) |
Search on survey information: where a survey shows evidence is likely to be concealed or tampered with, enter and search the place, for reasons in writing | s. 17(3) |
Within thirty days of seizure or freezing, apply to the Adjudicating Authority for retention of the record or property, or continuation of the freezing order | s. 17(4) |
Retention of property and records, subject to the Adjudicating Authority's orders | ss. 20, 21 |
5. PMLA Search, BNSS Search and Survey
Basis | PMLA search, s. 17 | BNSS search |
|---|---|---|
Authority | ED officers authorised by a Deputy Director or above | Police, or under a warrant |
Threshold | Reason to believe, recorded in writing | Reasons recorded under s. 185 for a search by a police officer |
Oversight | Reasons and material to the Adjudicating Authority, sealed | Record to the Magistrate; audio-video recording of search and seizure under s. 105 |
Extra powers | Freezing; examination on oath; retention application | Ordinary search and seizure powers |
Residual | BNSS rules apply so far as consistent: s. 65 PMLA | General law |
- Search against survey. A survey under Section 16 inspects and verifies at the place of business; a search under Section 17 may be of any place, and seizes or freezes.
6. Frequently Asked Questions
Who can authorise a search under Section 17?
The Director, or an officer not below the rank of Deputy Director authorised by him, on reasons to believe recorded in writing.
Is a police report on the scheduled offence required before a search?
No. The proviso requiring it was omitted in 2019.
Can bank or crypto accounts be frozen?
Yes. Under Section 17(1A), where seizure is not practicable, property including bank, demat and VDA accounts may be frozen, followed by an application to the Adjudicating Authority within thirty days.