Without Proving Knowledge About Proceeds Of Crime, Can Money Laundering Be Presumed? Supreme Court Asks ED

The Supreme Court on Thursday resumed hearing the string of petitions challenging the constitutional validity of several provisions of the PMLA Act.Additional Solicitor General S. V. Raju continued his submissions on behalf of the Enforcement Directorate.Does it follow that without leading in evidence, the prosecution can succeed on the allegation of money-laundering without pointing out the aspect of 'knowingly or is actually involved in any process or activity', which is the core of section 3? SC Asks(a) in the case of a person charged with the offence of money-laundering under section 3. the Authority or Court shall, unless the contrary is proved presume that such proceeds of crime are involved in money-laundering; and(b) in the case of any other person, the Authority or Court, may presume that such proceeds of crime are involved in money-laundering.Justice A. M. Khanwilkar to ASG S. V. Raju: "PMLA section 3 (definition of money laundering), which is the relevant provision of the constituent offence, is in the nature of legal presumption that there is involvement in money-laundering. Section 3 is the foundational fact which you have to establish in any case, as prosecution. Then perhaps the burden whould be on the other side by virtue of 24. In the context of section 24, you need to point out that in section 3, there is legal presumption in the nature of deeming provision"ASG: "if I establish the proceeds of crime and if I establish that one is connected with the proceeds of crime, prima facie I have already established. Because if I don't establish, the charge would not have been framed..."Justice Khanwilkar: "the question was that is section 3 in the nature of a provision which says that once you have proceeds of crime, you are found in possession, then there is legal presumption that it is a case of money laundering?...Unless that interpretation is given to section 3, how can there be presumption of money laundering? Otherwise that is the fact that you have to prove that he 'directly or indirectly attempted to indulge or knowingly assisted or knowingly was a party or was actually involved in any process or activity connected with the proceeds of crime'. That is a part that you have to prove, as the prosecution. Without proving that fact, how can there be presumption of money laundering?"ASG: "If it is a case of circumstantial evidence, as it would be ordinarily, he has to rebut the circumstances. There are proceeds of crime in a house where he is found. Whether he is connected with the proceeds of crime knowingly, that prosecution will never know. Prosecution will only know that there is grave suspicion to show his involvement in the offence of money laundering. The prosecution will only know the circumstances. Earlier, the framing of charge was not there. The framing of charge makes all the difference"Justice Khanwilkar: "Once charge is framed, there is naturally a prima facie case, or a suspicion that a case is there. We understand. But if charge is framed, does it follow that without leading in evidence, the prosecution can proceed on the allegation of money-laundering or succeed on the allegation of money-laundering without pointing out that aspect of 'knowingly or is actually involved in any process or activity', which is the core of section 3? That has to be proved by you"ASG: "that, according to me, is in the special knowledge of the accused (in context of section 106, Evidence Act)"Justice Khanwilkar: "Once you prove that fact, then he has to rebut it. That is legal presumption under section 24. Unless he produces evidence then, it will be a case of money laundering. But that basic fact has to be proved by you"ASG: "Basic fact as regards proceeds of crime, I have to establish. But knowingly etc…If he is involved in one of these processes- concealment, acquisition or use, then he is guilty of the offence of money laundering. If I show proceeds of crime, if I show they were concealed or possession is there and if I show there is some connection between him and the proceeds of crime, that is all that is required. Then the presumption kicks in and he has to establish how he is not connected with the proceeds of crime which would translate into the offence of money laundering. This is my submission...When I show existence of proceeds of crime coupled with a grave suspicion of his involvement, according to me, that is sufficient"Justice Khanwilkar: "That is doubtful. That is not sufficient. You have to establish some basic fact, especially in the light of this section 3 and its Explanation"Justice Dinesh Maheshwari to the ASG: "From your submission, I understood that mere existence of money referable to proceeds of crime is not sufficient for presumption to kick in. The other element of concealment, acquisition will also have to be established by the prosecution. So mere existence of proceeds of crime would not survive. Who is guilty of money-laundering or who is involved in money-laundering will...

Without Proving Knowledge About Proceeds Of Crime, Can Money Laundering Be Presumed? Supreme Court Asks ED

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