Preamble & Objectives of PMLA

 Preamble & Objectives of PMLA

The Prevention of Money Laundering Act, 2002.

• “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.”

The legislative intent to the promulgation of the PMLA was categorically spelt out by the Hon’ble Apex Court in its judgment Vijay Madanlal Choudhury v. Union of India reported in 2022 SCC OnLine 929: MANU/SC/0924/2022, Paras 23, 43 and 44, whereof would be as under:

“23. […] Even the Preamble of the Act reinforces the background in which the Act has been enacted by the Parliament being commitment of the country to the international community. It is crystal clear from the Preamble that the Act has been enacted 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. It is neither a pure regulatory legislation nor a pure penal legislation. It is amalgam of several facets essential to address the scourge of money-laundering as such. In one sense, it is a sui generis legislation.”

Xxx xxx xxx

“43. Needless to mention that such process or activity can be indulged in only after the property is derived or obtained as a result of criminal activity (a scheduled offence). It would be an offence of moneylaundering to indulge in or to assist or being party to the process or activity connected with the proceeds of crime; and such process or activity in a given fact situation may be a continuing offence, irrespective of the date and time of commission of the scheduled offence. In other words, the criminal activity may have been committed before the same had been notified as scheduled offence for the purpose of the 2002 Act, but if a person has indulged in or continues to indulge directly or indirectly in dealing with proceeds of crime, derived or obtained from such criminal activity even after it has been notified as scheduled offence, may be liable to be prosecuted for offence of money-laundering under the 2002 Act -- for continuing to possess or conceal the proceeds of crime (fully or in part) or retaining possession thereof or uses it in trenches until fully exhausted. The offence of money-laundering is not dependent on or linked to the date on which the scheduled offence or if we may say so the predicate offence has been committed. The relevant date is the date on which the person indulges in the process or activity connected with such proceeds of crime. These ingredients are intrinsic in the original provision (Section 3, as amended until 2013 and were in force till 31.7.2019); and the same has been merely explained and clarified by way of Explanation vide Finance (No. 2) Act, 2019. Thus understood, inclusion of Clause (ii) in Explanation inserted in 2019 is of no consequence as it does not alter or enlarge the scope of Section 3 at all. 

• 44. As mentioned earlier, the rudimentary understanding of 'money-laundering' is that there are three generally accepted stages to moneylaundering, they are: 

• (a) Placement: which is to move the funds from direct association of the crime.

• (b) Layering: which is disguising the trail to foil pursuit.

• (c) Integration: which is making the money available to the criminal from what seem to be legitimate sources.” (Emphasis Added)

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