If this clause were retained in the bill, all corporates would have been open to harassment by the investigative agencies as falsification of accounts can also related to relatively minor lapses in accounts.

Standing committee members Prithvi Raj Chavan and T Subbarami Reddy said that several aspects of the recently introduced Foreign Exchange Management Bill and the Prevention of Money Laundering Bill need to be fine-tuned.

This has a gaping lacuna as it can put innocent people behind bars who come in touch with money that has been unlawfully acquired, experts noted.

Economist SS Bhalla saidthe bill, in its present form, will not benefit anybody. Nobody stands to gain by the law, it is only the vicious part of the law that stands to gain.

According to lawyer Amit Desai, the words willfully or knowingly are not used anywhere in the definition. Mens rea, an essential ingredient of criminal jurisprudence is missing, he said. There has to be some nexus between the transaction and the crime itself. This should not mean that when you sell property, you will have to inquire into the antecedents of the money you receive as consideration, he explained.

CII has suggested that the terms ``knowingly and wilfully'' should be inserted before the word ``acquires'' and the word ``directly'' be substituted for the words ``either directly or indirectly.'' Simultaneously, Clause 23, which presumes culpable mental state, should be deleted.

According to Desai, it is also unfair for the government to confiscate the proceeds because in some cases the money could have been extorted from an innocent person. Hence,the bill needs to have a clause for restitution of confiscated wealth.

While industry has been clamouring for dismissing most pending Fera violation cases once Fema comes into being -- Fera, they have argued, is an outdated and Draconian law -- there was a difference of opinion between the members of the standing committee on finance.

While Subbarami Reddy felt that Fema should be retrospective in nature, Chavan felt that this was not feasible under the law. In any case, he pointed out, a blanket dismissal of all cases would also ensure that genuine violation cases would also be closed. CII northern region chairman Arun Bharat Ram pointed out that some via media could be found. He said where show causes have not even been issued could perhaps be brought under the ambit of Fema.

INSIGHT
Two bills too wide

The proposed bills on foreign exchange management and prevention of money laundering have been hastily hived out of Fera. Ostensibly, the first bill is necessary in the absence ofcapital account convertibility.

Therefore, its objective should be to facilitate forex transactions and foreign investment. But the assumed objective does not figure in the bill. Since the proposed Fema is to deal with civil offenses, cases covered by criminal offenses under Fera cannot obviously be taken over by it.

The Prevention of Money Laundering Bill has generated controversy. It does not define money laundering per se. There are misgivings about falsification of accounts though it is obvious that money laundering necessarily involves falsification of accounts. The issue of intention, a crucial element in crime, is left out. Finally, recipients of expenditure of laundered proceeds are roped in by the bill. Both bills need clarity in terms of objectives, definitions, and do's and don'ts.