Proceeds of crime
The term "PROCEEDS OF CRIME", which is an essential ingredient of Money-Laundering has been defined under Section 2(u) of PMLA, and it means and includes
- Any property
- derived or obtained
- Directly or indirectly
- By any person
- as a result of criminal activity
- relating to a
- scheduled offense or
- value of any such property, or
- where is property is taken or held outside the country,
- then the property equivalent in value held within the country.
So, only when proceeds of crime are projected or claimed as untainted property, the offense of Money- Laundering is deemed to have been committed which is lacking in the present matter.
One essential requirement to constitute an offence of money laundering is to be involved in any process or activity connected to proceeds of crime. Proceeds of crime have its genesis in a criminal activity relating to a scheduled offence. Moreover, the legislature did not intend that in every case, where a charge sheet is filed for commission of a scheduled offence, the proceedings under PMLA for the offence of money laundering should be initiated
Money laundering while facially appears to comprise one or more clear and simple financial transactions, it is not so, and it involves and comprises a complex web of financial and other transactions. It has been held that the money laundering transaction has to essentially involve the following three stages:
(i) The Placement Stage: the malfeasant places the crime money into the normal financial system;
(ii) The Layering Stage: the money introduced into the financial system is layered-spread out into several transactions within the financial system with a view to concealing the origin of the original identity of the money and to make this origin/identity virtually disappear.
(iii) The Integration Stage: the money is thereafter integrated into the financial system in such a way that its original association with crime is totally obliterated and the money could be used by the malfeasant and/or the accomplices to get it as untainted/clean money.
The above-stated three stages have been held to be quintessential ingredients of money laundering by High Court of Andhra Pradesh in B. Rama Raju v. Union of India, [ 164 CompCas 149 (AP)], High Court of Bombay in Hasan Ali Khan v. Union of India, [2012 BomCR(Cri) 807] and High Court of Madras inM. Shobana v. Assisstant Director, Directorate of Enforcement [2013 (4) MLJ (Crl) 286].
It is only when proceeds of crime are projected or claimed as untainted property i.e. uncorrupted; the offense of Money- Laundering is committed.
In the case of B. Rama Raju, S/o B. Ramalinga Raju Vs. Union of India (UOI), [MANU/TN/1696/2011]; [(2012)1MLJ419], the “proceeds of crime” was defined as under:
103. Since proceeds of crime is defined to include the value of any property derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence, where a person satisfies the adjudicating authority by relevant material and evidence having a probative value that his acquisition is bona fide, legitimate and for fair market value paid therefor, the adjudicating authority must carefully consider the material and evidence on record (including the reply furnished by a noticee in response to a notice issued under Section 8(1) and the material or evidence furnished along therewith to establish his earnings, assets or means to justify the bona fides in the acquisition of the property); and if satisfied as to the bona fide acquisition of the property, relieve such property from provisional attachment by declining to pass an order of confirmation of the provisional attachment; either in respect of the whole or such part of the property provisionally attached in respect whereof bona fide acquisition by a person is established, at the stage of the Section 8(2) process.
The myth that only big ticket scams are covered under PMLA is nothing but living in a fool's paradise. Under PMLA, committing any offenses as specified in the Part A and Part C of the Schedule of PMLA, will invoke the provisions of PMLA. Some of the Acts and offences, which may attract PMLA, are enumerated herein below:
An offence which is the offence of Cross Border implications and is specified in Part A of Schedule under PMLA, or
The offences against property under Chapter XVII of the Indian Penal Code is applicable, involving cross border implications.
Offences under the
The Indian Penal Code, 1860 including offences relating to Cheating, Counterfeiting of Government stamps, Dishonest or Fraudulent removal or Concealment of Property to prevent distribution among creditors, dishonestly or fraudulently preventing debt being available for creditors, Dishonest or Fraudulent execution of deed of transfer containing false statement of consideration;
Offences under the Narcotic Drugs and Psychotropic Substances Act, 1985;
Offences under the Prevention of Corruption Act, 1988;
Offences under the Securities and Exchange Board of India Act, 1992 including offences relating to
- Prohibition of manipulative and deceptive devices,
Insider Trading and substantial Acquisition of securities or control.
Offences under the Customs Act, 1962 relating to evasion of duty or prohibitions;
Offences under the Emigration act, 1983
Offences under the Foreigners act, 1946
Offences under the Antiquities and Arts Treasures Act, 1972
Offences Under The Copyright Act, 1957, including
- Offence of infringement of copyright or other rights conferred by Copyright Act.
Knowing use of infringing copy of computer programme;
Offences under the Trade Marks Act, 1999 including
- Application of false trademarks, trade descriptions, etc.
- Selling goods or providing services to which false trademark or false trade description is applied.
- Falsely representing a trade mark as registered.
Abetment in India of acts done out of India.
Offences under The Information Technology Act, 2000, including
- Breach of confidentiality and privacy,
Offence or contravention committed outside India.
- Offences under the Suppression of Unlawful Acts Against Safety of Maritime Navigation and Fixed Platforms on Continental Shelf Act, 2002.
- The Indian Penal Code, 1860 including offences relating to Cheating, Counterfeiting of Government stamps, Dishonest or Fraudulent removal or Concealment of Property to prevent distribution among creditors, dishonestly or fraudulently preventing debt being available for creditors, Dishonest or Fraudulent execution of deed of transfer containing false statement of consideration;