When Kingfisher Airlines collapsed under the weight of unpaid loans, it wasn’t just a business failure. It was a signal flare—warning that India’s enforcement systems weren’t built to chase disappearing debtors.

Lavish parties gave way to court summons. The self-proclaimed “King of Good Times” left the country. Over ₹9,000 crore in unpaid loans remained, scattered across a consortium of banks. And just like that, India was left chasing both a man and his money.

A few years later, a familiar script played out. This time, with Nirav Modi—the diamantaire whose glittering brand masked a ₹13,000 crore banking fraud. The escape was swift. The paper trail was complex. The assets? Already in motion.

These stories weren’t outliers. They were red flags—warnings that when crime moves faster than the law, recovery becomes a race against time. 

This demands a law that can trace, freeze, and reclaim what has been laundered—even if the trail leads across borders or into someone else’s name.

Enter the PMLA: India’s Law With Teeth

That’s where the Prevention of Money Laundering Act, 2002 (PMLA) steps in. 

Not just as a prosecutorial tool—but as India’s most powerful legal mechanism to follow the money, freeze questionable assets, and ensure that crime doesn’t pay.

It’s the law that picks up where the headline ends.

Let’s break down how it works—and why business leaders, investors, and even individual asset holders need to understand its reach.

The Law: How Asset Confiscation Works under PMLA

Under Section 5 of the PMLA, the Enforcement Directorate (ED) can provisionally attach any property it has “reason to believe” is linked to the proceeds of crime. This isn’t a final verdict—it’s a preventive move to stop assets from being moved or hidden.

And the term “property”? It’s broad by design [Section 2(v)]:

• Tangible: land, buildings, jewellery, luxury cars
• Intangible: shares, mutual funds, crypto wallets, bank balances

Importantly, the PMLA does not require a conviction before property can be attached. What the ED needs is a reason to believe—a preliminary threshold that allows it to attach assets based on credible material evidence, which must be recorded in writing.

This standard—though lower than the threshold for conviction—has been constitutionally upheld. In Vijay Madanlal Choudhary v. Union of India, the Supreme Court affirmed that “reason to believe” is a valid and necessary safeguard in tackling the complexities of financial crime. The ruling effectively gave the PMLA sharper teeth, reinforcing the state’s ability to act swiftly in freezing potentially laundered assets.

But with that speed and scope comes a growing tension: between effective enforcement and the principles of due process, especially when innocent third parties find themselves caught in the net.

Beyond the Accused: Why Even Third Parties Get Caught

One of the PMLA’s defining features is its wide net. The ED can attach assets not only in the accused’s name, but also those:

• held jointly with others
• transferred to third parties (even family members or shell entities)
• acquired innocently but using illicit proceeds in the chain of transaction

For example, if black money was used to buy a farmhouse in a spouse’s name, that farmhouse can still be frozen.

Even bona fide purchasers may face hurdles in reclaiming such assets—unless they can prove due diligence and distance from the original laundered source.

Imagine your company receives an investment or payment from a business partner—only to later discover that the money was linked to a laundering scheme. Even if you were completely unaware, your company’s bank accounts or assets could still be frozen unless you can prove clean hands and distance from the laundered source.

Challenging Attachments: Your Legal Safeguards

While the ED  operates with sweeping powers under the PMLA, the law is not without its checks. Layered statutory remedies—and a growing body of case law—ensure that due process isn’t sidelined in the pursuit of swift action.

1. Contesting provisional attachment

Once assets are provisionally attached, the first line of review lies with the Adjudicating Authority under Section 8. The Authority is tasked with examining whether the property is indeed linked to money laundering—and crucially, whether the ED followed due process. If the evidence is weak or the procedural safeguards weren’t met, the attachment can be set aside. This stage isn’t just a formality; it’s a legal filter to prevent arbitrary or excessive use of power.

2. Relief before the Appellate Tribunal

If you’re unhappy with the Adjudicating Authority’s decision, the next step is to appeal to the Appellate Tribunal—which can confirm, change, or overturn that order. 

3. Seeking restoration after confiscation

Even after assets are permanently confiscated by the State, there’s still room for fairness. Under Section 8(8), any third party with a genuine interest—who acted in good faith and took reasonable precautions—can approach the Special Court to seek restoration of property.

If the Court is satisfied that the claimant had no knowledge of the tainted source and suffered a loss, it can order the return of the property. This is particularly relevant for lenders, partners, or buyers caught unknowingly in a tainted transaction.

4. Writ jurisdiction and overarching safeguards

Where there is a manifest procedural lapse or lack of jurisdiction, High Courts under Article 226 of the Constitution have entertained writ petitions challenging the ED’s attachment orders.

Global Reach: When Dirty Money Crosses Borders

Remember, the PMLA isn’t just inward-looking.

India can pursue laundered assets overseas through international cooperation and mutual legal assistance treaties (MLATs). This extraterritorial reach allows Indian authorities to request foreign jurisdictions to freeze, attach, or even repatriate proceeds of crime.

In recent years, Indian enforcement agencies—especially the ED—have coordinated with counterparts in jurisdictions like UK, UAE and Singapore to secure asset freezes, property seizures, and returns of high-value assets linked to banking fraud and economic offences.

In an era, where financial transactions are borderless, the law had to evolve—and it has.

For Business Leaders: What You Can Do

✅Trace the Source: Before acquiring assets or onboarding clients, understand where the money came from—not just who it came from.

✅Audit Your Exposure: Map how related-party structures or previous transactions may create PMLA risks.

✅Train Your Teams: Frontline staff must know the red flags—layered transactions, offshore linkages, undervalued deals.

✅Challenge with Confidence: If your property is wrongly attached, the law gives you a path to challenge. Know your rights.

Wrapping Up

Money laundering isn’t just a financial offence—it’s a systemic threat. Illicit funds don’t sit idle. They fuel narcotics, trafficking, terror financing, election interference, and tax evasion. Every layer of concealment chips away at public trust, market stability, and national security.

That’s why India’s asset confiscation regime under the PMLA matters. It doesn’t wait for convictions to act. It follows the money—freezing and seizing what’s tainted, even if it’s been moved, masked, or passed on. 

But with great power comes great responsibility. The PMLA gives enforcement teeth—but it also demands balance. Attachment must be backed by credible evidence. Restoration mechanisms must be real. Due process must not become an afterthought.

In that light, asset seizure isn’t just about punishment. It’s about restoring trust.

For governments, that means using legal muscle with transparency and restraint.
For businesses, it’s about choosing vigilance over velocity—knowing that shortcuts today can become liabilities tomorrow.
And for individuals, it’s a reminder that compliance isn’t optional — and silence isn’t protection.

Because in the end, following the money isn’t just about chasing crime. It’s about protecting integrity, credibility, and confidence in the system.

Suggested Reading

1. The Supreme Court on constitutionality and interpretation of provisions of the Prevention of Money Laundering Act, 2002 – Trilegal
2. Law on attachment, seizure and confiscation of properties under PMLA 
3. https://indiankanoon.org/doc/14485072/ 
4. Asset attachment under PMLA: What is the right approach? – Shardul Amarchand Mangaldas & Co 
5. AT-PMLA Clarifies Limits of Attachment: Seizure and Attachment Can Coexist, But Cannot Exceed Scheduled Offence Proceeds 
6. Property Attachment under PMLA: Appellate Tribunal Clarifies that Ownership and Possession Remain Unaltered 
7. Francis Chakkalamathaom Peter v. The Deputy Director, Directorate of Enforcement,Chennai | Appellate Tribunal- Prevention Of Money Laundering Act | Judgment | Law | CaseMine 
8. Restoration of Property attached or confiscated under PMLA: An Overview