The Prevention of Money Laundering Act, 2002 (PMLA) came into force with effect from 1st July, 2005. The Act has been evolved gradually in the years 2009, 2013, 2015, 2018 and 2019. Let us discuss one of the important amendments of PMLA made in Section 3 dealing with the Offence of Money Laundering.
Sec-3 defines Offence of money-laundering as:
“Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering.”
The above definition was amended in 2013 vide PMLA (Amendment act) 2012 (2 of 2013) w.e.f 08.02.2013 by substituting the following words instead of “proceeds of crime and projecting”
“Proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming”
The above definition was again amended in 2019 vide Finance Act 2019 w.e.f. 01.08.2019 by inserting the following explanation;
‘‘Explanation.—For the removal of doubts, it is hereby clarified that,—
(i) a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely:—
(a) concealment; or
(b) possession; or
(c) acquisition; or
(d) use; or
(e) projecting as untainted property; or
(f) claiming as untainted property,
in any manner whatsoever;
(ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever.”.
The above said amendment in 2013 has been brought in with the aim to enlarge the scope of the provisions of PMLA, by substituting and including certain words in Sec.3 of PMLA vide PMLA (Amendment act) 2012 (2 of 2013). It further extrapolates the chain of offences which lead to the offence of Money laundering.
With its latest amendment made vide Finance Act 2019, the “Explanation” has been inserted under this section as to what construes the Offence of Money Laundering. It is explained herein, that a person shall be guilty of Money laundering, if he is found to have directly or indirectly involved or is knowingly a party to one or more of the following processes, connected with the ‘proceeds of crime’ such as (a) Concealment, (b) Possession, (c) Acquisition, (d) Use, (e) Projecting as untainted property, (f) Claiming it as untainted property, in any manner whatsoever.
It covers not only the person who has committed scheduled offence but also every person who is directly or indirectly concerned with concealment, possession, acquisition, use, projecting or claiming as untainted property.
Moreover, this section criminalises the possession or conversion of the proceeds of crime which includes projecting or claiming the proceeds of the crime as untainted.
The Explanation (ii) also states that the process or activity connected with proceeds of crime is a “continuing activity” and continues till such time a person is directly or indirectly enjoying the proceeds of the crime. The legislative intent here appears to be to prosecute and to attach all proceeds of crime, however remotely related.
With the effect of these amendments, the scope for the Enforcement Directorate in assessment of commission of crime by an offender is vastly enlarged to deal with a case of Money Laundering exclusively on the strength of the specifics of the case.
However in this regard, there are various judgments by Honourable High Courts and Honourable Tribunal. In the recent judgement, the Hon’ble High Court of Punjab and Haryana in the case of Seema Garg & Ors. V. The Deputy Director, Directorate of Enforcement, has observed as follows:
“A person who is not connected with commission of scheduled offence as well property derived from said offence but had dealt with any other property of a person, who had committed scheduled offence, would fall within the ambit of Section 3 of the PMLA, which cannot be countenanced in law.”
SRI LAW ASSOCIATES
Disclaimer: Posting on this blog is for information purpose only and it’s not a legal advice.