Supreme Court Reaffirms Due Process: Limits on Freezing Bank Accounts under PMLA

In a significant judicial intervention regarding the powers of investigative agencies, the Supreme Court has reiterated that the Enforcement Directorate (ED) cannot exercise the coercive power of freezing bank accounts under the Prevention of Money Laundering Act (PMLA) based merely on suspicion. The Court emphasized that such actions must be backed by concrete 'reasons to believe,' which must be recorded in writing before any such measure is initiated. This ruling serves as a critical check on the exercise of executive power, reinforcing the principle of due process. Under the PMLA, the authority to freeze assets is a potent tool designed to prevent the dissipation of proceeds of crime. However, the Court noted that the absence of a rigorous evidentiary threshold risks turning a preventive measure into an instrument of harassment, potentially impacting the fundamental right to carry on trade and business. By mandating that authorities must demonstrate a clear link between the bank account and the alleged criminal activity, the judiciary has sought to balance the state's interest in curbing money laundering with the protection of individual rights and institutional accountability.