Money-laundering

Section 2(1)(p) of the Prevention of Money-laundering Act, 2002 gives money-laundering the meaning in Section 3. Under Section 3, whoever directly or indirectly attempts to indulge, or knowingly assists, or knowingly is a party, 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, is guilty of money-laundering. The Explanation added in 2019 clarifies that involvement in any one of these processes is enough, and that the activity continues as long as a person enjoys the proceeds.

The offence rests on two defined concepts. Proceeds of crime under Section 2(1)(u) means property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence, or its value. A scheduled offence under Section 2(1)(y) is an offence in Part A or Part C of the Schedule, or in Part B where the total value involved is one crore rupees or more. Money-laundering is therefore not the predicate crime itself but dealing with its proceeds. In Vijay Madanlal Choudhary v. Union of India (2022) the Supreme Court read Section 3 widely, held the Explanation clarificatory, and held that there can be no money-laundering offence once the person is finally discharged or acquitted of the scheduled offence or the case is quashed.

Punishment under Section 4 is rigorous imprisonment of three to seven years and fine; the maximum rises to ten years where the proceeds relate to an offence under paragraph 2 of Part A of the Schedule. Section 45 makes offences cognizable and non-bailable and imposes twin conditions for bail: the Public Prosecutor must be heard, and if he opposes, the court must be satisfied there are reasonable grounds for believing the accused is not guilty and is not likely to offend on bail. The proviso relaxes this for a person under sixteen, a woman, a sick or infirm person, or one accused of laundering less than one crore rupees.

In Nikesh Tarachand Shah v. Union of India (2017) the twin conditions, as then worded, were struck down; Parliament amended Section 45 in 2018, and Vijay Madanlal upheld the amended provision. Examiners test the six processes, the sentencing range and the bail conditions.