BACKGROUND OF MONEY LAUNDERING
1.1 need foR SPeCIal aCt on money laundeRIng
Money is generated in a very large scale due to crimes. These crimes cover trade in narcotics, smuggling, trade in banned/prohibited articles, antics, corruption, counterfeiting currency, gambling, trade in prohibited arms/ammunition, selling national secrets etc.
This money is required to be converted into untainted money so that it can be used in big way, as such huge quantum of money cannot be transferred and used without banking channels.
In common terminology, money laundering is understood as converting black money or Number Two money into white money or Number One money.
In brief, converting tainted money into untainted money is called ‘money laundering’.
‘Laundering’ is to switch black money or dirty money into clean money. ‘Clean money’ means money coming from known or legal sources, while ‘dirty money’ means money coming from illegal activities.
As per sub-committee on Narcotics and Terrorism of US Senate Foreign Relations Committee, ‘Money Laundering’ is the conversion of profits from illegal activities into financial assets which appear to have legitimate origins.
As per definition adopted in Interpol General Secretariat Assembly in 1995, money laundering is any act or attempted act to conceal or disguise the identity of illegally obtained proceeds so that they appear to have originated from legitimate sources.
Loss of tax revenue is also involved but comparatively that is minor issue.
The maj or i ss ue i s t hat t he t ai nt e d mo ne y i s us e d f or f undi ng t err ori st acti vi ti es. Thi s pr o bl e m has bec o me mor e ac ut e i n ma ny c o unt ri es, i ncl udi ng i ndi a, as o ur nei g hbo uri ng c o unt ri es t he ms el ves ar e i nv ol ve d i n s uc h acti vi ti es.
The me nace i s at i nt er nati o nal l e vel at a muc h l ar ger s c al e.
one way t o pr e ve nt s eri o us cri me i s t o ma ke i t di ffi c ul t t o c o nvert bl ac k mo ne y i nt o whi t e mo ne y.
Ge ner al Ass e mbl y of Uni t e d nati o ns a dopt e d a poli ti c al decl ar ati o n i n J une 1998, c alli ng upo n me mber st at es t o a dopt nati o nal mo ne y l a underi ng l e gi sl ati o n a nd pr ogr a mme. The pr es e nt ‘ Pr e ve nti o n of Mo ne y La underi ng Act’ i s pass e d t o i mpl e me nt t he Un r es ol uti o n.
Un sec uri t y Co uncil Res ol uti on 1373 of 28- 9- 2001 e mpo wers sec uri t y
Co uncil t o e nf or ce t er ms of Un Co nve nti o n f or suppr essi o n of t he Fi na nci ng of Terr ori s m . The c o nve nti o n was pr opos e d i n 1999 a nd bec a me eff ecti ve f r o m 10- 4- 2002.
eur ope a n Uni o n ha d i ss ue d ne w Mo ne y La underi ng Di r ecti ve i n 2001 t o a me nd t he 1991 di r ecti ve.
1.1-1 Why the term ‘laundering’
Ge ner al i mpr essi o n i s t hat ‘ mo ne y l a underi ng ’ t er m i s us e d as i t c o nvert s bl ac k mo ne y i nt o whi t e mo ne y. it may be s o, b ut t hat i s not t he ori gi n of t he wor d ‘ mo ne y l a underi ng ’ .
Ther e i s i nt er esti ng hi st or y be hi nd t he wor d ‘ l a underi ng ’ . Al Ca po ne, not ori o us mafi a i n Us A , o bt ai ne d l ot of mo ne y f r o m cri m i nal e n - t er pri s es. He est a bli s he d l a undr y mac hi nes all over Us A at vari o us p ubli c pl aces. The mac hi nes c o ul d be us e d by p ubli c by p utti ng c oi ns.
si nce t hi s l a undr y b usi ness was a c as h b usi ness, he was a bl e t o c o - vert hi s c as h i nt o l e gi ti mat e e ar ni ngs a nd he nce t he na me ‘ mo ne y l a underi ng ’ .
1.1-2
Process of money laundering
Mo ne y l a underi ng i nv ol ves t hr ee st ages
( 1) Pl ace me nt ( of hot mo ne y i n fi na nci al s yst e m or r et ail ec o no - my)
( 2) Layeri ng ( s e par ati ng mo ne y f r o mi t s s o ur ce t hr o ug h s eri es of fi na nci al t r a ns acti o ns i. e. c o nce ali ng s o ur ce of o wners hi p of
f unds by cr e ati ng l ayers of t r a ns acti o ns t o di s g ui s e a udi t t r ail a nd pr ovi de a no ny m i t y. it i s no w c o mpar ati vel y e as y d ue t o el ect r o ni c f unds t r a nsf er) a nd
( 3) i nt e gr ati ng ( of hot mo ne y w i t h l e gi ti mat e mo ne y. Mo ne y i s assi mil at e d w i t h ot her l e gi ti mat e ass et s).
Pop ul ar pl aces of mo ne y l a underi ng ar e st oc k mar ket s, agri c ul t ur al pr o d uct s ( as t her e i s no i nc o me t ax o n agri c ul t ur al i nc o me a nd t r a ns - acti o ns ar e mostl y o n c as h basi s), r e al est at e, pr opert y mar ket, g ol d a nd pr eci o us met al s, hi g h val ue c o ns u mer g oo ds, bog us i mport s / e x port s et c.
Cr e ati ng of bog us c o mpa ni es, s ho w i ng l oa ns or i nvest me nt s, f al s e e x port-i mport i nv oi ces et c. ar e vari o us met ho ds a dopt e d. The t r a ns - acti o ns ar e s o l ar ge t hat t r a ns acti o ns have t o be r o ut e d t hr o ug h
Ba nks, Fi na nci al i nsti t uti o ns, i nt er me di ari es et c.
1.1-3
Rogue Countries
The me nace of mo ne y l a underi ng has i ncr e as e d al most be y o nd c o nt r ol as Gover n me nt s of s o me c o unt ri es li ke ni geri a, Pa ki st a n,
Af g ha ni st a n et c. ar e t he ms el ves i nv ol ve d a nd ar e s upporti ng mo ne y l a underi ng acti vi ti es a nd t err ori s m . suc h r og ue c o unt ri es ma ke t he c o nt r ol over mo ne y l a underi ng ver y di ffi c ul t.
1.1-4 Rogue Banks
Li ke r o uge c o unt ri es, t her e ar e r og ue ba nks al s o, whi c h s upport
mo ne y t r a nsf ers t hr o ug h q uesti o na bl e me a ns.
i n o ur o wn c o unt r y, i t i s w i del y beli e ve d t hat J a mmu a nd kas h m i r Ba nk was i nv ol ve d i n acti vi ti es of s uc h mo ne y t r a nsf ers, whi c h ha d q uesti o na bl e ori gi n. of c o urs e, t her e ar e ma ny s uc h ba nks i n i ndi a w i t h di ff er e nt de gr ee of ‘ r o ug hness’.
1.2 ImPlementatIon of PReventIon of money laundeRIng aCt, 2002
The ‘ Pr e ve nti o n of Mo ne y La underi ng Act, 2002’ was pass e d o n 17- 1- 2003. The Act was noti fi e d a nd bec a me eff ecti ve f r o m1- 7- 2005.
Di r ect or at e of Fi na nci al i nt elli ge nce Uni t, i ndi a ( Fi U- i nD), under M i ni st r y of Fi na nce i s e mpo wer e d t o i mpl e me nt part of t he Act, r el ati ng t o c oll ecti ng a nd pr ocessi ng fi na nci al i nt elli ge nce.
Di r ect or at e of enf or ce me nt under F e MA i s al s o e mpo wer e d t o e xer ci s e vari o us po wers under Pr e ve nti o n of Mo ne y La underi ng Act, 2002 i n r es pect of c o nfi s c ati o n, arr est, p uni s h me nt et c.
1.2-1 amendments to Prevention of money laundering act
The Pr e ve nti o n of Mo ne y La underi ng Act has bee n a me nde d f r o m ti me t o ti me. Lat est a me nd me nt s ar e ma de o n 1- 8- 2019 t hr o ug h Fi na nce ( no. 2) Act, 2019.
The c ha nges ma de w . e. f. 1- 8- 2019 ar e s u mmari z e d bel o w .
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Defi ni ti o n of ‘ i nt er me di ar y ’ a me nde d t o e xcl ude s ub- br oker - s ecti o n 2( n) a me nde d
Defi ni ti o n of ‘ pers o n c arr yi ng o n desi g nat e d b usi ness or pr of essi o n ’ has bee n a me nde d t o i ncl ude i ns pect or Ge ner al of Re gi st r ati o n a nd e xcl ude Re gi st r ar a nd sub- Re gi st r ar a p - poi nt e d under Re gi st r ati o n Act - s ecti o n 2( s a) a me nde d
Defi ni ti o n of ‘ off e nce of mo ne y l a underi ng ’ w i de ne d t o i n - cl ude k no w i ngl y c o nce al me nt, poss essi o n, us e, pr oj ecti ng/ cl ai m i ng as unt ai nt e d mo ne y et c. it i s al s o cl ari fi e d t hat t hi s i s a c o nti n ui ng off e nce - s ecti o n 3 a me nde d
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Res po nsi bili t y of r e porti ng e nti t y w i de ne d t o undert a ke e n - ha nce d dili ge nce i n r es pect of s peci fi e d t r a ns acti o ns be y o nd pr es cri be d li m i t, not t o undert a ke s us pi ci o us t r a ns acti o ns, mo ni t or s us pi ci o us s peci fi e d t r a ns acti o ns a nd kee p r ec or d of s uc h t r a ns acti o ns a nd t hei r kyC f or fi ve ye ars - s ecti o n 12 AA i ns ert e d
Pr ovi si o n of c arr yi ng o ut s e ar c h of pr e m i s es o nl y aft er f orwar di ng a r e port t o Magi st r at e has bee n o m i tt e d. Th us, s e ar c h of c a n be ma de by a ut hori s e d offi cer di r ectl y - s ecti o n 17 a me nde d
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Pr ovi si on of carr yi ng o ut s ear c h of a pers on onl y aft er f or war d - i ng a r e port t o Magi st r at e has bee n o m i tt e d. Th us, s e ar c h of a pers o n c a n be ma de by a ut hori s e d offi cer di r ectl y - s ecti o n 18 a me nde d
Aut hori t y c a n cl os e c o mpl ai nt e ve n aft er speci al Co urt has t a ke n c og ni z a nce, i f Aut hori t y fi nds t hat no off e nce has bee n ma de o utproviso t o s ecti o n 44( 1)( b)
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Tri al under s c he d ul e d off e nce a nd off e nce under Pr e ve nti o n of Mo ne y La underi ng Act will be i nde pe nde nt. it will not be j oi nt t ri alExplanation (i ) t o s ecti o n 44( 1).
u subs e q ue nt c o mpl ai nt c a n be a dde d t o ori gi nal c o mpl ai nt i s s a me t ri al i f f urt her e vi de nce f o und- ex pl a nati o n(ii ) t o s ecti o n 44( 1).
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off e nce under Pr e ve nti o n of Mo ne y La underi ng Act i s c og - ni z a bl e a nd no n- bail a bl e. e mpo wer e d offi cer c a n arr est w i t ho ut warr a ntExplanation t o s ecti o n 45( 2) [ Thi s i s gi ve n r et r os pecti ve eff ect as dr afti ng of s ecti o n 45 was f a ul t y].
u For mati o n of i nt er- m i ni st eri al c oor di nati o n c o mm i tt ee f or i nt er- de part me nt al a nd i nt er- age nc y c oor di nati o n.
1.3 SCheme of the PReventIon of money laundeRIng
aCt
Mo ne y La underi ng basi c all y i s k no w i ngl y de ali ng w i t h pr ocee ds of cri me, di r ectl y or i ndi r ectl y.
The Act pr ovi des bot h f or ci vil a nd cri m i nal li a bili t y.
1.3-1 Criminal liability under Prevention of money laundering act
Cri me whi c h r es ul t s i n t ai nt e d mo ne y i s a s e par at e off e nc e under vari o us l a ws as s peci fi e d i n sc he d ul e t o Pr e ve nti o n of Mo ne y La underi ng Act. Thes e off e nces ar e p uni s ha bl e under t hos e Act s.
The p uni s h me nt i s t o t he pers o n/s who i s /ar e i nv ol ve d i n act uall y c o mm i tti ng t hat off e nce.
The off e nce as s peci fi e d i n s ecti o n 4 of Pr e ve nti o n of Mo ne y La un - deri ng Act i s a s e par at e off e nce. The p uni s h me nt under s ecti o n 4 of Pr e ve nti o n of Mo ne y La underi ng Act i s not o nl y t o t hos e who ar e act uall y i nv ol ve d i n de ali ng w i t h t ai nt e d mo ne y b ut al s o o n t hos e who ar e k no w i ngl y i nv ol ve d, di r ectl y or i ndi r ectl y, i n de ali ng w i t h pr ocee ds of cri me.
Thi s i s a cri m i nal off e nce, whi c h will be t ri e d by s peci al c o urt s des - i g nat e d f or t hi s p ur pos e under s ecti o n 2( z) of Pr e ve nti o n of Mo ne y La underi ng Act. The t ri al will be bot h f or c har ges under t he s peci fi c Act whi c h i s a cri me a nd al s o off e nce of mo ne y l a underi ng under Pr e ve nti o n of Mo ne y La underi ng Act. Ho we ver, i t i s not ‘ j oi nt t ri al’.
The speci al Co unt i s Co urt of sessi o ns whi c h i s desi g nat e d as s peci al c o urt under s ecti o n 43 of Pr e ve nti o n of Mo ne y La underi ng Act.
Appe al agai nst deci si o n of speci al Co urt li es w i t h H i g h Co urt as per po wers under Co de of Cri m i nal Pr oce d ur e - s ecti o n 47 of Pr e ve nti o n of Mo ne y La underi ng Act.
1.3-2 Civil liability i.e. confiscation of tainted property
i n a ddi ti o n t o cri m i nal li a bili t y, t he pr opert y i nv ol ve d i n mo ne y l a underi ng c a n be att ac he d a nd f r oz e n by Ce nt r al Gover n me nt a nd l at er c o nfi s c at e d.
The pr oce d ur e i s as f oll o ws. or der of pr ovi si onal att ac h me nt or f r eezi ng will bei ss ue d by D i r ect or, J oi nt Di r ect or or De p ut y Di r ect or e mpo wer e d under Pr e ve nti o n of Mo ne y La underi ng Act ( who i s e mpo wer e d under t he Act) f or upt o 180 days - s ecti o n 5( 1) of Pr e ve nti o n of Mo ne y La underi ng Act.
The di r ect or will s e nd c opy of or der of pr ovi si o nal att ac h me nt or f r eezi ng of ass et s t o Adj udi c ati ng Aut hori t y - s ecti o n 5( 2) of Pr e ve n - ti o n of Mo ne y La underi ng Act.
The pr oce d ur e t o be f oll o we d a nd t he f or ms t o be us e d have bee n s peci fi e d i n Pr e ve nti o n of Mo ne y La underi ng ( t he Ma nner of Forwar di ng a Copy of t he or der of Pr ovi si o nal Att ac h me nt of Pr opert y al o ng w i t h t he Mat eri al, a nd Copy of t he Re as o ns al o ng w i t h t he Mat eri al i n r es pect of sur ve y, t o t he Adj udi c ati ng Aut hori t y a nd i t s
Peri o d of Ret e nti o n) Rul es, 2005.
Adj udi c ati ng Aut hori t y i s a ppoi nt e d under s ecti o n 6( 1) of Pr e ve nti o n of Mo ne y La underi ng Act.
Fi nal or der of att ac h me nt or f r eezi ng will be i ss ue d by Adj udi c ati ng
Aut hori t y under s ecti o n 8( 3) Pr e ve nti o n of Mo ne y La underi ng Act. Thi s or der of s ei z ur e or f r eezi ng c o nti n ues till speci al Co urt di s pos es of t he cri m i nal matt er.
Appe al agai nst or der of Adj udi c ati ng Aut hori t y will li e bef or e Appel - l at e Tri b unal c o nsti t ut e d under s muggl ers a nd For ei g n exc ha nge
Ma ni p ul at ors ( Forf ei t ur e of Pr opert y) Act, 1976 [ s AF e MA] - s ecti o n 26( 1) of Pr e ve nti o n of Mo ne y La underi ng Act.
it i s not necess ar y t o wai t till a ppe al peri o d i s over t o c o mme nce pr ocee di ngs w i t h att ac h me nt as or der pass e d by Adj udi c ati ng Aut hori t y i s j ust li ke a decr ee of ci vil c o urt, whi c h bec o mes e xec ut a bl e mo me nt
i t i s dr a wnSyed Akeel Shah v. Directorate of Enforcement ( 2023) 175 s CL 494 = 145 t ax ma nn. c o m 532 ( J &k a nd La da k h HC DB).
Appe al agai nst or der of Appell at e Tri b unal li es bef or e H i g h Co urt bot h o n q uesti o n of l a w a nd f act s - s ecti o n 42 of Pr e ve nti o n of Mo ne y La underi ng Act.
1.3-3 order of confiscation by Special Court
Aft er c o ncl usi o n of Tri al of acc us e d, i f speci al Co urt fi nds t hat of - f e nce of mo ne y l a underi ng has bee n c o mm i tt e d, i t ( s peci al c o urt) s hall or der t hat pr opert y i nv ol ve d i n mo ne y l a underi ng or whi c h has bee n us e d f or mo ne y l a underi ng, s hall be c o nfi s c at e d - s ecti o n 8( 5) of Pr e ve nti o n of Mo ne y La underi ng Act.
Aft er c o nfi r mati o n of or der, s o me pers o ns may have cl ai ms i n r es pect of s uc h c o nfi s c at e d pr opert y, i f t he y ha d act e d i n g oo d f ai t h b ut s uff er e d q ua nti fi a bl e l oss. suc h cl ai ms s ho ul d a ppl y t o speci al Co urt. The pr oce d ur e t o be f oll o we d has bee n s peci fi e di n Pr e ve nti o n of Mo ne y La underi ng ( Rest or ati o n of Co nfi s c at e d Pr opert y) Rul es, 2016.
Aft er or der of c o nfi s c ati o n by speci al Co urt, t he pr opert y s hall vest a bs ol ut el y i n Ce nt r al Gover n me nt - s ecti o n 9 of Pr e ve nti o n of Mo ne y La underi ng Act.
i f aft er c o ncl usi o n of Tri al, i f speci al Co urt fi nds t hat off e nce of mo ne y l a underi ng has not bee n c o mm i tt e d, i t ( s peci al c o urt) s hall or der r el e as e of pr opert y - s ecti o n 8( 6) of Pr e ve nti o n of Mo ne y La underi ng Act.
1.4 PRovISIonS foR PReventIon of money laundeRIng
In the aCt
Tho ug ht he Act t al ks a bo ut ‘ pr eve nti on ’ of Money La underi ng, act uall y, t her e wer e ver y f e w pr ovi si o ns f or ‘ pr e ve nti ng ’ mo ne y l a underi ng.
The Pr e ve nti o n of Mo ne y La underi ng Act mai nl y pr ovi de d f or ci vil a nd cri m i nal p uni s h me nt s i n r es pect of mo ne y l a underi ng aft er t he off e nce i s al r e a dy c o mm i tt e d, whi c h i s o nl y a det err e nt t o c o mm i t cri me.
Pr ovi si o n f or i nf or m i ng s us pi ci o us t r a ns acti o ns was c o nt ai ne d o nl y i n r ul e 8 of Pr e ve nti o n of Mo ne y La underi ng ( Mai nt e na nce of Rec or ds) Rul es, 2005.
Ho we ver, no w s ecti o n 12 AA of Pr e ve nti o n of Mo ne y La underi ng Act has bee n i ns ert e d t o c ast r es po nsi bili t y of ‘ r e porti ng e nti t y ’ t o undert a ke e nha nce d dili ge nce i n r es pect of s peci fi e d t r a ns acti o ns be y o nd pr es cri be d li m i t, not t o undert a ke s us pi ci o us t r a ns acti o ns, mo ni t or s us pi ci o us s peci fi e d t r a ns acti o ns a nd kee p r ec or d of s uc h t r a ns acti o ns a nd t hei r kyC f or fi ve ye ars.
i n a ddi ti o n, t he Pr e ve nti o n of Mo ne y La underi ng Act c ast s r es po n - si bili t y o n ‘ r e porti ng e nti ti es ’ (li ke ba nki ng c o mpa ni es, fi na nci al i nsti t uti o ns, i nt er me di ari es a nd ot hers) t o f ur ni s h i nf or mati o n. The y have t o i nf or m all s us pi ci o us t r a ns acti o ns t o Di r ect or, Fi na nci al i nt elli ge nce Uni t [ Fi U- i nD], under M i ni st r y of Fi na nce.
The Act pr ovi des f or kyC nor ms ( kno w yo ur Cust o mer) t o e ns ur e i de nti t y of t hei r c ust o mers, t o e ns ur e t hat t he y ar e ge n ui ne, i de nti - fi a bl e a nd t r ace a bl e.
The ‘ r e porti ng e nti t y ’ i s r e q ui r e d t o undert a ke ‘ cli e nt d ue dili ge nce ’ under r ul e 9 of Pr e ve nti o n of Mo ne y La underi ng ( Mai nt e na nce of Rec or ds) Rul es, 2005.
1.5 defInItIon of ‘money laundeRIng’
The r el at e d defi ni ti o ns ar e as f oll o ws.
Money Laundering - Whos oe ver di r ectl y or i ndi r ectl y att e mpt s t o i nd ul ge or k no w i ngl y assi st s or k no w i ngl y i s a part y or i s act uall y i nv ol ve d i n a ny pr ocess or acti vi t y c o nnect e d w i t h t he pr ocee ds of cri me i ncl udi ng i t s c o nce al me nt, poss essi o n, ac q ui si ti o n or us e a nd pr oj ecti ng or cl ai m i ng i t as unt ai nt e d pr opert y s hall be g uil t y of of - f e nce of mo ne y-l a underi ng.
Explanation - (i ) For t he r e moval of do ubt s, i t i s her e by cl ari fi e d t hat - (i ) a pers o n s hall be g uil t y of off e nce of mo ne y-l a underi ng i f s uc h pers o n i s f o und t o have di r ectl y or i ndi r ectl y att e mpt e d t o i nd ul ge or k no w i ngl y assi st e d or k no w i ngl y i s a part y or i s act uall y i nv ol ve d i n o ne or mor e of t he f oll o w i ng pr ocess es or acti vi ti es c o nnect e d w i t h pr ocee ds of cri me, na mel y - ( a) c o nce al me nt or ( b) poss essi o n or ( c) ac q ui si ti o n or ( d) us e or ( e) pr oj ecti ng as unt ai nt e d pr opert y or ( f) cl ai m i ng as unt ai nt e d pr opert y in any manner whatsoever (ii ) t he pr ocess or acti vi t y c o nnect e d w i t h pr ocee ds of cri me i s a c o nti n ui ng acti vi t y a nd c o nti n ues till s uc h ti me a pers o n i s di r ectl y or i ndi r ectl y e nj oyi ng t he pr ocee ds of cri me by i t s c o nce al me nt or
poss essi o n or us e or pr oj ecti ng i t as unt ai nt e d pr opert y or cl ai m i ng i t as unt ai nt e d pr opert y i n a ny ma nner what s oe ver - secti o n 3 of Pr e ve nti o n of Mo ne y La underi ng Act as a me nde d w . e. f. 1- 8- 2019.
The ‘ Explanation ’ has bee n i ns ert e d w . e. f. 1- 8- 2019. The wor ds ‘ in any manner whatsoever’ a ppe ari ng i n
Explanation (i) a ppl y t o all cl a us es ( a) t o ( f) of t he
Explanation (i).
The a me nd me nt ma de w . e. f. 1- 8- 2019 has bee n hel d vali d i n Vijay
Madanlal Choudhary v. UOI [ 2022] 140 t ax ma nn. c o m 610 ( s C 3 me mber be nc h).
Proceeds of crime‘ Pr ocee ds of cri me ’ me a ns a ny pr opert y de - ri ve d or o bt ai ne d, di r ectl y or i ndi r ectl y, by a ny pers o n as a r es ul t of cri m i nal acti vi t y r el ati ng t o a s c he d ul e d off e nce or t he val ue of a ny s uc h pr opert y, or wher e s uc h pr opert y i s t a ke n or hel d o ut si de t he c o unt r y, t he n t he pr opert y e q ui val e nt i n val ue hel d w i t hi n t he c o unt r y or a br oa d.
Explanation - For t he r e moval of do ubt s, i t i s her e by cl ari fi e d t hat ‘ pr ocee ds of cri me ’ i ncl ude pr opert y not o nl y deri ve d or o bt ai ne d f r o mt he s c he d ul e d off e nce b ut al s o a ny pr opert y whi c h may di r ectl y or i ndi r ectl y be deri ve d or o bt ai ne d as a r es ul t of a ny cri m i nal acti v - i t y r el at a bl e t o t he s c he d ul e d off e nce - s ecti o n 2( 1)( u) of Pr e ve nti o n of Mo ne y La underi ng Act. The e x pl a nati o n has bee n i ns ert e d w . e. f. 1- 8- 2019.
Any bribe given with the requisite intent shall be considered as ‘proceeds of crime’ under PMLA, 2002, bribe giver can also be prosecuted - Any bri be gi ve n w i t h t he r e q ui si t e i nt e nt s hall be c o n - si der e d as ‘ pr ocee ds of cri me ’ under P ML A , 2002 - - - Bri be- gi ver c a n al s o be pr ocee de d agai nst f or off e nce of mo ne y l a underi ng u/s 3 of t he P ML A , 2002 - Directorate of Enforcement v. Padmanabhan Kishore [ 2022] 144 t ax ma nn. c o m 28 ( s C).
Ac q ui si ti o n of bri be mo ne y i s ‘ pr ocee ds of cri me ’ a nd he nce mo ne y l a underi ng - Ac q ui si ti o n of bri be mo ne y by a p ubli c s er va nt q uali fies as a n act of mo ne y l a underi ng, a nd ill e gal gr ati fic ati o n r e pr es e nt s pr ocee ds of cri me. Wher e ver t her e ar e all e gati o ns of c orr upti o n, t her e i s ac q ui si ti o n of pr ocee ds of cri me whi c h i t s el f t a nt a mo unt t o mo ne y-l a underi ng, si nce ‘ us e ’ i s o ne of t he si x acti vi ti es me nti o ne d i n s ecti o n 3Y Balaji v. Karthik Desari [ 2023] 150 t ax ma nn. c o m 329 = 179 s CL 49 ( s C).
Rs. 995/-
