Economic, Commercial and Intellectual Property Laws · Prevention of Money Laundering

Reciprocal Arrangements and Miscellaneous Provisions under PMLA

Updated 11 October 2026 · Fact-checked

Reciprocal arrangements let India work with a contracting State to trace, attach and confiscate proceeds of crime and to serve summons and warrants across borders. A Special Court or the Central Government sends or receives a letter of request. Section 24 separately sets the burden of proof: a presumption against a person charged under section 3.

Understand Reciprocal Arrangements and Miscellaneous Provisions

Money laundering usually crosses borders. Proceeds earned in India may sit in a foreign bank, and evidence may be abroad. One country's officers cannot act in another country on their own. The Act therefore provides for agreements and for formal requests between governments and courts.

Section 55 defines a contracting State as a country or place outside India with which the Central Government has made arrangements, through a treaty or otherwise. Tracing means determining the nature, source, disposition, movement, title or ownership of property. Identifying includes establishing proof that the property was derived from, or used in, an offence under section 3.

Section 56 lets the Central Government enter into agreements with other countries to enforce the Act and to exchange information for preventing or investigating offences. It can notify provisions needed to implement the agreement. It can also notify conditions, exceptions or qualifications on how this Chapter applies to a contracting State with reciprocal arrangements.

A letter of request is the formal channel. It flows both ways. Outward: a Special Court asks a foreign court or authority for evidence (section 57) or for execution of an attachment, freezing or confiscation order (section 60(1)). Inward: the Central Government receives a request from a contracting State and forwards it to a Special Court, an authority or the Director (sections 58 and 60(2)).

Section 24 is the burden of proof rule. For a person charged with money-laundering under section 3, the Authority or Court shall presume, unless the contrary is proved, that the proceeds of crime are involved in money-laundering. For any other person, the Authority or Court may presume it. So the first is mandatory and rebuttable, the second discretionary.

Key rules to remember

Section 24(a) – charged person: Person charged under s.3 → Authority/Court SHALL presume proceeds are involved in money-laundering, unless contrary is proved; Mandatory but rebuttable. The accused must prove the contrary.
Section 24(b) – any other person: Any other person → Authority/Court MAY presume; Discretionary. 'Shall' versus 'may' is the examinable point.
Section 56 – agreements: Central Government may agree with a foreign Government to (a) enforce the Act, (b) exchange information for prevention and investigation; Implemented by notification in the Official Gazette.
Section 57 – outward letter of request for evidence: Application by Investigating Officer or superior officer → Special Court satisfied → letter of request to court or authority in contracting State; Evidence received is deemed collected during investigation (s.57(3)).
Section 58 – inward letter of request: Request from contracting State → Central Government may forward to Special Court or any authority under the Act; Executed under this Act or any other law in force.
Section 60 – property: Outward: Special Court on application by Director or Administrator. Inward: Central Government forwards to Director; Chapter III (attachment, adjudication, confiscation) and Chapter V (survey, search, seizure) apply to the property: s.60(6).
Section 59 – summons, warrants and conditions for transferred prisoners: Special Court (offence under s.4) sends summons/warrant in duplicate to foreign court; foreign ones are executed in India as if from an Indian court. Where a person transferred to a contracting State under s.59(2) is a prisoner in India (s.59(3)): Special Court or Central Government may impose conditions. Where a person transferred to India under s.59(1) is a prisoner in a contracting State (s.59(4)): Special Court ensures the conditions of transfer are complied with; custody as the Central Government directs in writing; Arrest on a foreign warrant is dealt with under section 19. Section 59(3) and (4) only deal with conditions that apply to prisoners who are transferred. They do not lay down a procedure for transfer.
Section 60(7) – confiscated property: Central Government may return the property to the requesting State or compensate it by disposal on agreed terms; Reasonable expenses of investigation, prosecution or proceedings are deducted.
Section 61 – form and manner: Every letter of request, summons or warrant sent to or received from a contracting State → in the form and manner the Central Government notifies; Applies in both directions. Section 57(2) separately lets the Central Government specify how a letter of request for evidence is transmitted.

How to solve Reciprocal Arrangements and Miscellaneous Provisions questions

Most questions give a scenario with a foreign element or an accused and ask what the law allows. Use this order.

1Identify the direction: is India asking a contracting State (outward) or is a contracting State asking India (inward)?
2Check that the foreign country is a contracting State under section 55(a), meaning arrangements exist through a treaty or otherwise.
3Identify what is sought: evidence (sections 57, 58), property (section 60), summons or warrants and the conditions applying to transferred prisoners (section 59), or confiscation or release where trial cannot proceed (section 58B).
4Name who acts: Special Court, Director, Central Government or an authority under the Act, and who must apply to whom.
5State the procedure that follows, such as forwarding to the Director, tracing under section 60(3), and Chapter III or V applying under section 60(6). Note that section 61 requires letters of request, summons and warrants to go in the form and manner the Central Government notifies.
6If the question involves a charged person's liability, apply section 24: 'shall presume' for a person charged under section 3, 'may presume' for others.
7Conclude clearly with the section, the outcome and, if relevant, return or compensation under section 60(7).

Quickest way: Direction-and-subject grid

When to use it: Use it for short notes or scenario questions with little time.

Write 'Out' or 'In' beside the facts.
Write the subject: evidence, property, process or trial-failed.
Map: evidence out = s.57; evidence in = s.58; property = s.60; summons/warrants = s.59; trial cannot conclude = s.58B; agreements = s.56; definitions = s.55.
Add one line on who acts and one line on the conclusion.
If burden of proof appears, write 'shall' for charged persons and 'may' for others.

Common mistakes in Reciprocal Arrangements and Miscellaneous Provisions

Saying section 24 presumes guilt for everyone.
Students remember 'reverse burden' and ignore the two limbs.
Fix: Write both limbs: 'shall' for a person charged under section 3, 'may' for any other person. The presumption concerns proceeds of crime being involved in money-laundering and can be rebutted.
Mixing up sections 57 and 58.
Both deal with letters of request and have adjacent numbers.
Fix: Section 57 is India asking a contracting State for evidence. Section 58 is India receiving a request from a contracting State.
Saying any foreign country is a contracting State.
The word sounds general.
Fix: Quote section 55(a): arrangements must have been made by the Central Government with that country through a treaty or otherwise.
Saying the Director directly sends a letter of request abroad.
The Director is prominent in the Act.
Fix: Under section 60(1) the Special Court issues the letter on the Director's application, or on that of the Administrator appointed under section 10(1).
Forgetting what happens to confiscated property after an inward request.
Students stop at confiscation.
Fix: Add section 60(7): the Central Government may return the property or compensate the requesting State on agreed terms, after deducting reasonable expenses.
Omitting section 58B when the foreign trial cannot be completed.
It is a short, less-read section.
Fix: Where the foreign trial cannot be conducted, for example on the accused's death or declaration as a proclaimed offender, or could not be concluded, the Central Government forwards the request to the Director, who applies to the Special Court, which passes appropriate orders on confiscation or release.

Worked examples

Example 1

An Investigating Officer in India is investigating a money-laundering case. The officer believes bank records are available in a contracting State. Explain how India can obtain them and the status of the records received.

Show the solution

Provision: section 57 allows a letter of request to a contracting State for evidence in an investigation or proceedings under the Act.
Procedure: the Investigating Officer, or an officer superior in rank, applies to the Special Court. The application must state that evidence is required and may be available in the contracting State.
The Special Court must be satisfied that the evidence is required. It may then issue a letter of request to a competent court or authority in that State.
The letter asks that court or authority to examine the facts, take the steps the Special Court specifies, and forward all the evidence collected to the Special Court.
Section 57(2) lets the Central Government specify the manner of transmission. Section 61 adds that letters of request, summons and warrants, whether going out or coming in, are sent in the form and manner the Central Government notifies.
Status: under section 57(3), every statement recorded or document or thing received is deemed to be evidence collected during the investigation.

Answer: India can obtain the records by a letter of request issued by the Special Court under section 57 on the officer's application, and the material received is deemed evidence collected during investigation.

Example 2

A court in a contracting State asks India to attach property in India derived from an offence under that State's corresponding law. Later, that State's trial ends with a finding that money-laundering was committed. Explain the steps in India and the fate of the property.

Show the solution

Provision: section 60(2) deals with an inward request for attachment, seizure, freezing or confiscation of property in India derived from an offence under a corresponding law.
The Central Government receives the letter of request and may forward it to the Director for execution in accordance with the Act.
On receipt of a letter of request, the Director directs authorities under the Act to trace and identify the property (section 60(3)), which may include inquiry, investigation or survey (section 60(4)).
Chapter III (attachment, adjudication, confiscation and vesting) and Chapter V (survey, searches, seizures) apply to the property (section 60(6)).
Under section 60(2A), on closure of the foreign case or conclusion of the trial where the foreign court finds money-laundering committed, the Special Court, on the Director's application for execution of confiscation, orders after notice to the affected persons that the property stands confiscated to the Central Government.
Under section 60(7), the Central Government may return the property to the requesting State or compensate it by disposal on mutually agreed terms, after deduction of reasonable expenses.

Answer: The Central Government forwards the request to the Director, who traces and identifies the property. The Act's attachment and confiscation machinery applies. After the foreign finding, the Special Court confiscates the property to the Central Government after notice. The Government may then return it or compensate the requesting State, less reasonable expenses.

Exam tips

Write the section number beside each step. Section 24, 57, 58, 59, 60 and 58B are the likely hooks.
For a 'distinguish' question, use the direction: section 57 is outward and section 58 is inward.
Quote section 55 definitions of contracting State, tracing and identifying; they are easy marks.
In section 24 answers, always say the presumption is rebuttable and give the shall/may split.
End each answer with a one-line conclusion, as ICSI style expects.

Practice questions from Prevention of Money Laundering

Reciprocal Arrangements and Miscellaneous Provisions: frequently asked questions

What is a letter of request under PMLA?

It is a formal request between a court or authority in India and one in a contracting State. It seeks evidence or execution of an attachment or confiscation order. Summons and warrants are also sent to a contracting State, and received from it, under section 59. Section 59(3) and (4) also deal with the conditions that apply to prisoners who are transferred, but the section does not set out a transfer procedure. Section 61 requires letters of request, summons and warrants to go in the form and manner the Central Government notifies.

What does section 24 of PMLA say about burden of proof?

In proceedings relating to proceeds of crime, the Authority or Court shall presume, unless the contrary is proved, that the proceeds are involved in money-laundering for a person charged under section 3. For any other person, it may make that presumption.

Who is a contracting State under PMLA?

It is a country or place outside India with which the Central Government has made arrangements through a treaty or otherwise. Section 55(a) gives this definition.

Can India return confiscated property to a foreign State?

Yes. Under section 60(7), property confiscated in India on a contracting State's request may be returned to that State, or that State may be compensated by disposal on agreed terms. Reasonable expenses of investigation, prosecution or proceedings are deducted.