PMLA | Money Laundering Offence Continues So Long As Proceeds Of Crime Are Concealed, Used Or Projected As Untainted : Supreme Court

Observing that the offence of money laundering is a continuing offence and not a one-time occurrence, the Supreme Court today (March 17) refused to discharge Pradeep Sharma, a former Gujarat IAS officer in a case under the Prevention of Money Laundering Act (PMLA). He was accused of generating proceeds of crime during his tenure as Collector by receiving bribes.He sought discharge, arguing that the alleged criminal activity leading to the generation of proceeds of crime occurred before the PMLA came into effect. Opposing the plea, the Enforcement Directorate argued that the criminal activity of money laundering was a continuing offence.The argument that no offence of money laundering could be made out because the alleged predicate offence occurred before the enactment of the PMLA was rejected by the Supreme Court. Instead, relying on the judgment in Vijay Madanlal Chaudhary vs. Union of India (2023) 12 SCC 1, the Court stated that the offence of money laundering is independent of the predicate offence and continues as long as the proceeds of crime are concealed, used, or presented as untainted property."It is well established that offences under the PMLA are of a continuing nature, and the act of money laundering does not conclude with a single instance but extends so long as the proceeds of crime are concealed, used, or projected as untainted property. The legislative intent behind the PMLA is to combat the menace of money laundering, which by its very nature involves transactions spanning over time.", the bench comprising Justice Vikram Nath and Justice Prasanna B. Varale observed.“The law recognizes that money laundering is not a static event but an ongoing activity, as long as illicit gains are possessed, projected as legitimate, or reintroduced into the economy. Thus, the argument that the offence is not continuing does not hold good in law or on facts, and therefore, the judgment of the High Court cannot be set aside on this ground. Even if examined in the context of the present case, the appellant's contention does not hold water. The material on record indicates the continued and repeated misuse of power and position by the appellant, resulting in the generation and utilization of proceeds of crime over an extended period. The respondent (ED) has successfully demonstrated prima facie that the appellant remained involved in financial transactions linked to proceeds of crime beyond the initial point of commission. The utilization of such proceeds, the alleged layering and integration, and the efforts to project such funds as untainted all constitute elements of a continuing offence under the PMLA. Thus, the proceedings initiated against the appellant are well within the legal framework and cannot be assailed on this ground.”, the Court added. The Court emphasized that the PMLA was enacted to combat money laundering, which by its very nature involves transactions spanning over time. Therefore, the PMLA could be applied to activities that continued after its enactment, even if the predicate offences occurred earlier.Further, the Court clarified that the relevant date for determining the offence is not the date of the predicate offence but the date on which the accused engages in activities connected to the proceeds of crime.Because the accused's alleged misuse of power and the utilization of proceeds of crime extended well beyond the initial acts of corruption, the Court found the offence to be a continuing one. In Vijay Madanlal Chaudhary's case, the Court made the following observations regarding the offence of money laundering and its nature as a continuing offence: “the criminal activity may have been committed before the same had been notified as scheduled offence for the purpose of the 2002 Act, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as scheduled offence, may be liable to be prosecuted for offence of money laundering under the 2002 Act — for continuing to possess or conceal the proceeds of crime (fully or in part) or retaining possession thereof or uses it in trenches until fully exhausted. The offence of money laundering is not dependent on or linked to the date on which the scheduled offence, or if we may say so, the predicate offence has been committed. The relevant date is the date on which the person indulges in the process or activity connected with such proceeds of crime.” The Court noted that because the offence alleged against the appellant was “a continuing offence under the PMLA, and the quantum of proceeds of crime involved far exceeds the statutory threshold and requires proper investigation and judicial scrutiny.” Money laundering has cascading effect; Courts must adopt a strict approachIn the judgment, the Court also made observations regarding the grave ramifications of the offence of money laundering."The illegal diversion...

PMLA | Money Laundering Offence Continues So Long As Proceeds Of Crime Are Concealed, Used Or Projected As Untainted : Supreme Court

Yash Mittal

The judgment also called for a stricter approach by Courts at pre-trial stage in PMLA cases given the grave consequences of the offence.

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Yash Mittal

PMLA | Money Laundering Offence Continues So Long As Proceeds Of Crime Are Concealed, Used Or Projected As Untainted : Supreme Court

Yash Mittal

The judgment also called for a stricter approach by Courts at pre-trial stage in PMLA cases given the grave consequences of the offence.

This is a premium content Available exclusively to Our subscribers

INR 1099+GST

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Yash Mittal

This is a premium content
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