Court Rules on the Continuing Offense of Money Laundering Under PMLA
In a significant judgment, the Delhi High Court has upheld the provisional attachment of property in a case concerning alleged money laundering under the Prevention of Money Laundering Act, 2002 (PMLA). The judgment clarifies the interpretation of money laundering as a continuing offense even if the proceeds were obtained before the enactment of the PMLA.
The case, Directorate of Enforcement v. M/s Mahanivesh Oils & Foods Pvt Ltd., revolved around the attachment of a property at Vasant Vihar, New Delhi, acquired using funds allegedly derived from criminal activities. The Directorate of Enforcement argued that the property, purchased before the PMLA came into force, continued to be a subject of money laundering as long as it was possessed or used after the Act's enforcement.
The High Court, in a detailed examination of Sections 3, 5, and 8 of the PMLA, emphasized that money laundering is a continuing offense. The judgment highlighted that possession and use of the proceeds of crime are integral to the definition of money laundering. The court ruled that the PMLA does not apply retrospectively to penalize the predicate offense but applies to the ongoing possession or use of such proceeds.
Mr. C. Hari Shankar and Mr. Om Prakash Shukla, JJ., presided over the bench. They noted the importance of the legislative intent behind the PMLA to combat money laundering, which impacts the economic fabric of the country. The court rejected the argument that the Act penalizes retrospectively, clarifying that the offense of money laundering under the PMLA is independent of the date of the predicate offense.
The judgment also addressed the procedural aspects, stating that the provisional attachment under Section 5(1) is justified if the officer has a reasoned belief that the property might be concealed or transferred to frustrate confiscation proceedings.
This judgment sets a precedent in interpreting the scope of money laundering under the PMLA, reinforcing the Act's role in addressing continuing offenses related to proceeds of crime.
Bottom Line:
Prevention of Money Laundering Act, 2002 (PMLA) - The act of being in possession or using property derived from proceeds of crime constitutes a continuing offence of money laundering under Section 3 of the PMLA, even if the property was acquired before the Act came into force.
Statutory provision(s): Prevention of Money Laundering Act, 2002 Sections 3, 5, and 8; Constitution of India, 1950 Article 20(1)
