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Concealment of wealth, whether earned legally or illegally, is not new. To curb this practice of money laundering, the central government has brought special legislation like the Prevention of Money Laundering Act (PMLA, 2002) to plug the gaps used to evade the payment of taxes and compliance with other consistent laws.
In accordance with India’s commitments under international law, the PMLA’s Statement of Objects & Reasons emphasises the legislative aim to adopt comprehensive laws for combating money laundering and seizing the profits of crime. It is pertinent to note in this context that Article 253 of the Indian Constitution, among other things, grants Parliament the authority to enact laws for the entirety or a portion of India’s territory in order to carry out any treaties, agreements, or conventions with any other country or countries, as well as any decisions reached any international conference, association, or other body.
According to the PMLA’s “charging provision,” anyone who, directly or indirectly, attempts to engage in, knowingly aids, knowingly participates in, or is actually involved in any process or activity related to “proceeds of crime,” including concealing, possessing, acquiring, or using it, as well as projecting or claiming it to be untainted property, is guilty of the crime of money-laundering.
Table of Contents
Money laundering is the process by which an illicit sum of money, such as “black money,” is obtained by unlawful means, covered up as legal tender, and then presented as “white money.” To make the money lawful, it must pass through several stages of conversions and transfers before it can be transferred to a bank or other legally recognised entity.
To address the problem of money laundering, the Prevention of Money Laundering Act of 2002 was introduced. Following are a few of its goals:
Before coming to the topic of scheduled offences, we must learn and understand the definition of money laundering and proceeds of crime. Section 3 of the Prevention of Money Laundering Act, 2002 elucidates on Offence of Money Laundering states that a person directly or indirectly involved, attempts, or knowingly assists and is a party to any such activity that deals with crime proceeds. The acquisition, concealment, possession or use of proceeds of crime falls under the definition of money laundering. It also includes a person who claims and even presents it as untainted property shall be guilty of a money laundering offence.
Section 2 (1)(u) of the PMLA defines the proceeds of crime as the property obtained or derived either directly or indirectly through a commission of scheduled offences under PMLA. Proceeds of crimes must have nexus with the scheduled offences under PMLA.
The scheduled offences are covered and specified under the schedule of the PMLA. The provisions of the PMLA can’t be invoked unless a scheduled offence under PMLA has been committed. The scheduled offences are set out as the offences committed against the state. These are also known as Predicate Offences, as the scheduled offence is a prerequisite to initiating the proceeding of money laundering under the Act.
The offences covered in the Schedule of the PMLA, 2002 are termed Scheduled Offences concerning Section 2(1)(y) of the Prevention of Money Laundering Act. The listed schedule offences are divided into Part A, Part B, and Part C.
Part A of the Schedule provides a description of the offences listed under various Acts, which requires no monetary limit to initiate a proceeding under the PMLA. Part B of the Schedule covers offences having a value of more than Rs. 1 crore or more, and Part C deals with offences involving cross-border implications.
The Parts mentioned above of the schedule are further explained in detail to understand the Scheduled offences under PMLA better. The following legislations and listed offences are:
The statutes and offences specified under Part A of the Schedule:
Paragraph 1- Offences under Indian Penal Code (IPC), 1860;
Paragraph 2-Narcotic Drugs and Psychotropic Substances Act, 1985;
Paragraph 3-Explosives Substances Act, 1908;
Paragraph 4- Unlawful Activities (Prevention) Act (UAPA), 1967;
Paragraph 5-Arms Act, 1959;
Paragraph 6- Wildlife Protection Act, 1972;
Paragraph 7-Immoral Traffic (Prevention) Act, 1956;
Paragraph 8- Prevention of Corruption Act, 1988;
Paragraph 9- The Explosives Act, 1884;
Paragraph 10-The Antiquates and Arts Treasures Act, 1972;
Paragraph 11-Securities and Exchange Board of India, 1992;
Paragraph 12-Customs Act, 1962;
Paragraph 13- The Bonded Labour System (Abolition) Act, 1976;
Paragraph 14- Child Labour (Prohibition and Regulation) Act, 1986;
Paragraph 15- Transplantation of Human Organ Act, 1994;
Paragraph 16- Juvenile Justice (Care and Protection of Children) Act, 2000;
Paragraph 17- Emigration Act, 1983;
Paragraph 18- The Passport Act, 1967;
Paragraph 19- The Foreigners Act, 1946;
Paragraph 20- The Copyright Act, 1957;
Paragraph 21- The Trade Marks Act, 1999;
Paragraph 22-Information Technology Act (IT Act), 2000;
Paragraph 23- The Biological Diversity Act, 2002;
Paragraph 24- Protection of Plants Varieties and Farmers Rights Act, 2001;
Paragraph 25- The Environment Protection Act, 1986;
Paragraph 26- Water (Prevention and Control of Pollution) Act, 1974;
Paragraph 27- Air (Prevention and Control of Pollution) Act, 1981;
Paragraph 28- The Suppression of Unlawful Acts against Safety of Maritime Navigation and Fixed Platforms of Continental Shelf Act, 2002;
Paragraph 29- The Companies Act, 20131.
The statutes and offences specified under Part B of the Schedule:
The offence of representing false documents, false declaration, etc., is described under the Part B of the Scheduled Offences under PMLA.
The offence specified under Part C of the Schedule:
This part of the schedule deals with trans-border crimes and is vital in the global curbing of money laundering crimes.
Any scheduled offence that has been committed in India and proceeds of the crimes, thereof transferred or attempt has been made to place outside the territory of India.\
Enforcement Directorate (ED) enjoys a wide range of administrative and implementing powers with respect to scheduled offences under PMLA. Sections 48 and 49 of the Prevention of Money Laundering Act, 2002 empower the Enforcement Directorate’s officers to investigate money laundering and terror financing cases. When the ED is of the view that any process of activity involved with the proceeds of crime or committed offence is in the list of scheduled offences under PMLA, then it gets the power to investigate the matter further.
Other agencies entrusted with investigating the offences under PMLA are State Police, Customs, SEBI, RIU, CBI, and NCB under their respective legislations.
Money Laundering is a continuous offence, it continues till any person enjoys the time proceeds of crime, and they shall be guilty of the offence of money laundering. The scheduled offences under PMLA cover no. of offences of various legislations which are severe and create instability in the society if not tackled directly. If any person commits scheduled offences under PMLA, they will only be charged under section 3 of the PMLA. The data significantly highlights a need to streamline the applicability of PMLA consultants and ensure more focus on serious offences. The government should regularly remove the non-serious offences that may dilute the true objective of the PMLA.
According to Section 2(u) of the PMLA, “proceeds of crime” are defined as any property that a person obtains via criminal conduct in connection with a “scheduled offence”, either directly or indirectly.
The offences mentioned under numerous Acts are described in Part A of the Schedule, and no monetary threshold must be met in order to bring a case under the PMLA. Part C of the Schedule deals with offences with cross-border repercussions, whereas Part B of the Schedule deals with offences with a value of Rs. 1 crore or more.
The Supreme Court ruled on July 27, 2022, that a PMLA lawsuit cannot proceed where there is no predicate or planned offence. The Enforcement Directorate (ED) bases its money laundering case on the predicate or initial offence.
There are three main crimes under the Proceeds of Crime Act of 2002 that are pertinent to actions involving unlawful financial gain. These include arranging, purchasing, and hiding.
According to the Act, anybody found guilty of hiding, disguising, converting, transferring, or disposing of the profits of illicit activities would face legal repercussions.
The Prevention of Money Laundering Act (PMLA) has a “very wide” definition of what constitutes money laundering, according to the Supreme Court, which stated on Tuesday that any conduct involving the profits of crime is included by the legislation’s definition in section 3.
Section 44 of the PMLA deals with “crimes that may be tried by Special Courts.” Section 44(1)(b) now includes a clause saying that the appropriate entity must give the Special Court a report of closure if no evidence of money laundering is discovered at the conclusion of the investigation.
According to the High Court, a money-laundering suspect can only be granted bail if both of the requirements listed in section 45(1) of the PMLA are met.
In the case of DA Paul v. Union of India & Ors, it was determined that money laundering under the PMLA is a “continuing offence”, and as a result, the issue of whether it is “retrospective” in its effects does not arise.
Crime profits are of a civil character. As a result, the PMLA prosecution, attachment, and confiscation actions for properties used in money laundering are separate processes. If a person is charged with money laundering, these two forms of legal action may be brought against him.
If the authority has a good reason to believe that the person is in possession of proceeds of crime and that the proceeds may be concealed, transferred, or handled in a way that thwarts the confiscation proceedings of such proceeds, such property may be attached for a period of up to 180 days.
Read our Article: Tracing the Developments in the Prevention of Money Laundering Act, 2002
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