Proceeds of Crime under Prevention of Money Laundering Act
Money Laundering is a serious crime.
A money laundering scheme is a method of concealing the source of illegally obtained funds in order to make it appear as if the funds came from a legal or legitimate source. It is most often obtained through illegal activities such as robbery, drug/human trafficking, dacoity, murder, and other forms of corruption. "Whosoever directly or indirectly attempts to indulge in, knowingly assists in, knowingly is a party to, or is actually involved in, any process or activity connected with proceeds of crime, including their concealment, possession, acquisition, or use, and projecting or claiming it as untainted property shall be guilty of the offence of money laundering," according to Section 3 of the Prevention of Money Laundering Act, 2005.a
History of Acts Relating to Money Laundering The Criminal Law Amendment Ordinance of 1944 (also known as the Money Laundering Criminal Law Amendment Ordinance): However, only certain crimes such as cheating, breach of trust, and corruption were covered by this ordinance, rather than all of the crimes listed in the Indian Penal Code.
The Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976, provides that property belonging to smugglers and foreign exchange manipulators may be forfeited. This act primarily addresses the punishment for the assets of foreign exchange manipulators and smugglers who used to operate illegally in the foreign exchange market.
There is a penalty for property derived from or used in illegal trafficking in narcotic drugs under the Narcotic Drugs and Psychotropic Substances Act, which was enacted in 1985.
The Anti-Money-Laundering and Counter-Terrorism Financing Act of 2002 (PMLA)
The Prevention of Money-Laundering Act was enacted by the Indian government in 2002, and it came into effect four years later, in 2005, after four years of implementation. Under this act, the government authorities were given the authority to seize any property, money or asset that was obtained from an illegal source or through the process of "money laundering."
When it comes to confiscated assets or money, it is the accused who has the burden of proving that the assets or money were obtained from a legitimate source. In accordance with Section 3 of the Prevention of Money-Laundering Act, money laundering is defined as follows: "Whoever directly or indirectly attempts to indulge in, knowingly assists in, knowingly is a party to, or is actually involved in any process or activity connected with the proceeds of crime, including its concealment, possession, acquisition or use, and projecting or claiming it as untainted property shall be guilty of the offence of money-laundering."
Although there are several issues pertaining to the Prevention of Money-Laundering Act, the most frequently encountered is the interpretation of the term proceeds of crime, also known as Proceeds of Crime (or POC).
The Prevention of Money-Laundering Act categorises as an offence any type of transaction involving the proceeds of a criminal offence. If the confiscated property falls under the category of proceeds of crime, the money laundering offence is said to have been committed.
The Enforcement Directorate (ED) is the primary enforcement officer in charge of determining whether a piece of property is a protected piece of property (POC) or not. He has the authority to do so if he has "reason to believe" that the property is in his possession.
Proceeds of Crime are defined as "proceeds of crime, means, and property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to the scheduled offence or the value of any such property" in Section 2(u) of the Prevention Of Money-Laundering Act, 2005. For simplicity's sake, any property acquired by anyone as a result of committing any schedule offence will be referred to as "Proceeds of Crime" property.
When the Government of India introduced the Finance Act of 2015, it clarified the definition of "proceeds of crime," as earlier offenders used to transfer the "Proceeds Of Crime" to another country and then flee from the country where they were arrested. After being changed by the 2015 amendment, the definition of "Proceeds Of Crime" was changed to read as follows: "proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to the scheduled offence or the value of any such property [or, where such property is taken or held outside the country, the property equivalent in value held within the country] A subsequent amendment was made to Section 2(1)(u) of the Prevention Of Money-Laundering Act, in which the words "or abroad" were added to the definition of "Proceeds Of Crime," resulting in the following: "proceeds of crime, means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to the scheduled offence or the value of any such property, [or, where such property is taken or held outside the country, the proper currency
This means that property classified as proceeds of crime includes not only property confiscated as a result of schedule offences, but also any property that may be derived or obtained as a result of any criminal activity related to the scheduled offence, whether directly or indirectly.