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Criminal Conspiracy as ‘Scheduled offence’ under the Prevention of Money Laundering Act, 2002

  • Category
    Polity & Governance
  • Published
    3rd Dec, 2023

Context:

The Supreme Court has held that criminal conspiracy will be treated as a scheduled offence under the Prevention of Money Laundering Act, 2002, only if the same is to commit an offence included in the Schedule to the Act and not otherwise.

About the Case:

  • The ruling came in response to a case where a woman, a former Vice Chancellor of Alliance University, was facing a PMLA complaint by the Enforcement Directorate (ED).
  • The ED accused her of entering into a conspiracy that involved executing nominal sale deeds for certain properties and facilitating the accused to use her bank accounts to siphon off university funds.
  • The Supreme Court, in its judgment, quashed the PMLA complaint against her, emphasizing the importance of the conspiracy being linked to a scheduled offence under the PMLA.

The SC’s view:

  • Background:
    • The Supreme Court held that the offence under Section 120B of IPC will become a scheduled offence only if the criminal conspiracy is to commit an offence already included in Parts A, B or C of the Schedule to PMLA.
  • The Supreme Court again clarified that the criminal conspiracy must be linked to committing an offence already included in Parts A, B, or C of the Schedule to the PMLA.
  • The decision has legal implications for cases involving money laundering allegations and criminal conspiracy.
  • It establishes a precedent that a criminal conspiracy, for it to fall under the purview of the PMLA, must have a direct connection to an offence listed in the PMLA Schedule.
  • Need of such legislation: The Court added that a person made an accused in a money laundering case, but not for a scheduled offence, would also stand to benefit if the money laundering case is ultimately quashed.
  • This interpretation provides clarity on the application of the law and ensures that the scheduled offences under the PMLA are directly linked to conspiracies intending to commit those specific offences.

What are Schedule Offences?

  • The offences under Sections 384 to 389 of the IPC relating to “extortion” are scheduled offences included in Paragraph 1 of the Schedule to the PMLA.

Prevention of Money Laundering Act, 2002:

  • The Prevention of Money Laundering Act, 2002 (PMLA) forms the core of the legal framework put in place by India to combat money laundering.
  • The PMLA and rules notified thereunder impose obligation on banking companies, financial institutions, and intermediaries and persons carrying on a designated business or profession, to verify identity of clients, maintain records and furnish information to FIU-IND.
  • PMLA is an act to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto.

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