1. Introduction

To enforce the provisions of the Prevention of Money Laundering Act, 2002 (hereinafter referred to as “the Act”), the Central Government of India may, if it deems fit, enter into a reciprocal agreement with any foreign country—subject to the approval of the latter and mutual acceptance. The foreign country with which such an agreement is made is referred to as a “contracting state,” as defined under Section 55(a) of the Act.

Such reciprocal arrangements are rooted in mutual respect and cooperation, and depend on both parties being receptive to one another’s legal needs and obligations. The core objectives are twofold: first, to facilitate the exchange of information to prevent offences under the Act or corresponding foreign laws; and second, to enable effective investigation after a crime has occurred. To operationalise these arrangements, the Central Government may issue notifications in the Official Gazette, which may include conditions, exceptions, or qualifications for implementing the provisions of Chapter IX of the Act.

2. Letter of Request

In the complex landscape of cross-border investigations, evidence often lies beyond national borders. When an Investigating Officer—or a higher-ranking official—believes that crucial information may be located in a contracting state, they may approach the Special Court with an application. If the court is satisfied, it can issue a letter of request to a competent authority in the foreign jurisdiction.

This request is not merely procedural—it serves to direct the foreign authority to examine the facts of the case, take specified steps, and return the evidence to India. The transmission of such letters is governed by the Central Government, and any material received in response is treated as evidence collected during the investigation. It’s a clear testament to how international cooperation amplifies the pursuit of justice.

3. Assistance to a Contracting State

This collaboration is reciprocal. Just as India may request assistance from another country, it can also provide help when approached by a contracting state. Upon receiving a letter of request regarding an investigation in a foreign country, the Central Government may forward it to a Special Court or another competent authority under the Act.

If the foreign court ultimately acquits the accused or finds no link between the property in India and the alleged offence, the Special Court may, upon application and after due notice, release the property to its rightful owner. This provision is especially important for immovable property located in India, which cannot be transferred abroad for investigation.

Moreover, when a trial abroad cannot proceed—for example, due to the death of the accused or their status as a proclaimed offender—the process does not end. The Central Government can forward the foreign court’s request for confiscation or release of property to the Director, who may apply to the Special Court. The court can then pass appropriate orders, ensuring that property is not left in legal limbo due to procedural deadlocks.

4. Reciprocal Arrangements for Court Processes

India’s legal cooperation with contracting states also extends to enforcing judicial processes such as summons, warrants, and search orders. When a Special Court handling offences under Section 4 of the Act needs to serve such documents abroad, it may send them—via prescribed channels notified by the Central Government—to the appropriate authority in the contracting state. Similarly, if India receives such requests from abroad, the same procedures apply in reverse.

Once executed, if a warrant of arrest has been served, the individual is dealt with under Section 19 of the Act. If a search warrant is executed, any findings are managed as per Sections 17 and 18. Items or documents recovered during searches in India on a foreign court’s request must be sent back through official channels. This mechanism promotes transparency and upholds procedural fairness.

In cases involving prisoner transfers between India and contracting states, the law allows movement with specific safeguards. The Special Court and Central Government may impose conditions to protect rights and uphold the sending country’s terms. This ensures lawful treatment while enabling efficient judicial cooperation across borders.

5. Cross-Border Asset Recovery & Confiscation

Justice in financial crimes hinges not only on convictions but also on recovering and repatriating proceeds of crime. Under the PMLA, India has built a framework to trace, attach, and confiscate such property, even when located outside its borders.

If the Director issues an attachment under Section 5, a freezing order under Section 17(1A), or the Adjudicating Authority or Special Court passes a confiscation order under Section 8, and the property is believed to be in a contracting state, a letter of request can be issued to the relevant foreign authority. Conversely, when a foreign court’s order is received, the Central Government may direct the Director to act upon it within India.

If a foreign court determines that money laundering has occurred and the related property is situated in India, the Director may seek execution of the confiscation order through the Special Court. Upon giving notice to the affected parties, the court may order confiscation, with the property vesting in the Central Government.

When a request is received under Sections 58 or 59, the Director may initiate steps—such as inquiries, surveys, and financial investigations—to trace and identify the property. These are conducted in accordance with the provisions of the Act, primarily those found in Chapters III and V, which deal with attachment, adjudication, searches, seizures, and vesting of property.

Once confiscated, such property may either be returned to the contracting state or sold in India, with the proceeds remitted—after deducting investigation and prosecution costs—based on mutually agreed terms. These provisions highlight India’s growing role in global efforts to track and recover criminal assets.

6. Procedure

The process for sending or receiving letters of request, summons, or warrants to and from a contracting state is governed by procedures prescribed by the Central Government. These are formalized via notifications to ensure uniformity, legal clarity, and adherence to international standards. Whether initiated domestically or received from abroad, all such communications follow this structured framework, ensuring that cross-border cooperation is orderly, legally sound, and consistent with sovereign obligations.

7. Authors Comments

This blog outlines the robust legal framework under the Prevention of Money Laundering Act, 2002, for facilitating international cooperation in criminal matters. As financial crimes grow increasingly complex and transnational, India’s ability to collaborate with other jurisdictions—whether for investigation, enforcement, or asset recovery—plays a critical role in preserving the integrity of its justice system. The legal procedures discussed here reflect not just legal formalities but a larger commitment to global accountability and reciprocal trust between nations.