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Very concept of offence of money-laundering in PMLA is very wide: Supreme Court

A three-judge Bench headed by Justice A. M. Khanwilkar is dealing with a batch of pleas concerning the interpretation of certain provisions of the PMLA

February 22, 2022 05:53 pm | Updated 05:53 pm IST - New Delhi

A view of the Supreme court.

A view of the Supreme court.

The Supreme Court on February 22 said the very concept of the offence of money-laundering in the Prevention of Money Laundering Act (PMLA) is “very wide” and any activity connected with the proceeds of crime is encompassed within the expression of Section 3 of the legislation.

Section 3 of the PMLA says whosoever 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 proceeds of crime and projecting it as untainted property shall be guilty of the offence of money-laundering.

A three-judge Bench headed by Justice A. M. Khanwilkar is dealing with a batch of pleas concerning the interpretation of certain provisions of the PMLA.

“The fact of the matter is that the very concept of the offence of money-laundering in our enactment is very broad, very wide. It is different. It is not based on one word or one expression alone,” said the Bench, also comprising Justices Dinesh Maheshwari and C. T. Ravikumar.

“So, any activity connected with the proceeds of crime is well taken over, is encompassed within this expression of Section 3,” the Bench observed.

A lawyer, appearing for one of the petitioners, told the Bench that Section 3 has to be read down to say that mere use and possession of proceeds of crime does not tantamount to money-laundering. He said there has to be something more and there has to be a projection.

“Any activity connected with the proceeds of crime, that may be inclusive of use, it may be inclusive of concealment, it may be inclusive of possession, that is how it has been framed in our enactment,” the Bench observed.

The counsel argued that in the legislation, there is enough tool kit to catch proceeds of crime and the PMLA is not proceeds of crime statute but a money-laundering statute. “We need to differentiate what is projecting as untainted and what is the mere use of proceeds of crime,” the counsel said.

To this, the Bench observed, “It cannot be a straightjacket. This Act takes all situations into account.” The counsel referred to the Vienna convention while arguing about the origin of money-laundering. “Conventions are not law by itself. That is guiding principle on the basis of which law can be made,” the Bench said.

The apex court said it cannot be focussing just on one word alone to understand the provision and interpret it. “So, what is wrong with the provision, please tell us. Otherwise, we have already heard all these arguments,” the Bench said.

The counsel said it is too broad and can be used as an instrument to harass innocent persons. “Bad action does not make a provision bad. In a given case, if it is wrongly applied or used or misused … that can always be taken care of by the courts or the forum,” the Bench said. The arguments in the matter would continue on Wednesday.

On February 15, the apex court had stressed the need for a fast investigation if the Enforcement Directorate (ED) comes across an intelligence input indicating huge illegal money-laundering, observing that “cash travels faster than light”.

Some of the petitioners had argued in the apex court that there cannot be "mechanical lodging" of an enforcement case information report (ECIR) as the PMLA requires that there must be some indication of the act of money-laundering and projecting the proceeds of crime as untainted.

Solicitor General Tushar Mehta had earlier told the Bench that there are over 200 petitions in the matter and interim stays have been granted in several serious cases due to which investigation has been affected. Some of these petitions have challenged the validity of certain provisions of the PMLA.

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