Money Laundering

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Renewed focus on Liberty - Delhi High Court upholds Constitutional Safeguards on Bail under PMLA

Securing bail under the Prevention of Money Laundering Act, 2002 (“PMLA“), is challenging due to the high threshold for bail stipulated by the Act. Section 45 of the PMLA stipulates that bail may be granted to an accused in a money laundering case only if two conditions are met: first, the Public Prosecutor must be given the opportunity to oppose the bail application; second, there must be prima facie satisfaction that the accused has not committed the offence and is not likely to commit any offence while on bail. It is frequently contended that these twin conditions pose a significant challenge to the prevailing legal principle in criminal jurisprudence that “bail is the rule and jail is the exception”. The Hon’ble Supreme Court has observed that the twin conditions challenge an accused’s right to liberty under Article 21 of the Constitution[1].Continue Reading Renewed focus on Liberty – Delhi High Court upholds Constitutional Safeguards on Bail under PMLA

The Prevention of Money Laundering Act, 2002 (“PMLA”), is a comprehensive law, dealing with aspects of money-laundering, attachment of proceeds of crime, adjudication, and confiscation thereof. The “proceeds of crime” is the fulcrum of the offence of money-laundering under the PMLA and all actions taken by the Enforcement Directorate (“ED”) under the PMLA invariably revolve around it. Accordingly, the definition of proceeds of crime under Section 2(1)(u) of the PMLA is of immense relevance. In terms of Section 2(1)(u) of the PMLA, “any property derived or obtained… by any person as a result of criminal activity relating to a scheduled offence…” is regarded as proceeds of crime. As held by the Hon’ble Supreme Court in Vijay Madanlal Choudhary & Ors. v. Union of India & Ors.[1] (“Vijay Madanlal”), the expression “derived or obtained” is indicative of a criminal activity, relating to a scheduled offence, already accomplished. The commission of a scheduled offense, whether registered with the jurisdictional police or under review by a competent forum through a complaint, constitutes the legal basis for any investigation conducted under the PMLA.Continue Reading Shifting Paradigms in PMLA Jurisprudence: Madras High Court reopens settled principles of Automatic Quashing of PMLA Proceedings

Is mere possession of proceeds of crime sufficient for trigerring PMLA?

Introduction:

A recent decision rendered by the Madras High Court in S. Srinivasan v. The Assistant Director, Directorate of Enforcement, Chennai[1], has held that being in possession of the proceeds of crime and claiming it to be untainted property can independently be perceived as money laundering under Section 3 of the Prevention of Money Laundering Act, 2002 (“PMLA”).

Although the said decision is in line with the principles previously enunciated by various courts while interpreting the PMLA provisions, such a simple interpretation may possibly lead to unintended situations. The primary reason being that anyone who is merely in possession of proceeds of crime without any genuine knowledge or any involvement therein can be prosecuted under PMLA. This perspective may prove to be counterproductive to the principle of presumption of innocence in criminal law.Continue Reading Is mere possession of proceeds of crime sufficient for trigerring PMLA?

Navigating the Crypto Maze: Delhi HC expands scope of predicate offences under PMLA

Introduction

A single judge bench of the Hon’ble High Court of Delhi delivered a significant ruling in the matter of Adnan Nisar v. Directorate of Enforcement and other connected matters[1], on September 17, 2024, holding that an offence committed in a foreign country can be classified as Predicate Offence, under the Prevention of…

Time to harmonize AML control systems for global, commercial Indian companies

Introduction

For many global organisations, finding the right balance between having global, unified compliance programs, and the need to address local legal and compliance risks, is a challenge. In this blog, we will address the challenge that money laundering and related issues presents to Indian companies operating in Europe.Continue Reading Time to harmonize AML control systems for global, commercial Indian companies

Obligations placed on stockbrokers to curb fraud and money laundering

The Securities and Exchange Board of India (“SEBI”) has held that preventing and detecting fraud or market abuse is a key pillar of investor protection. Consequently, SEBI has been relentless in introducing and amending rules, regulations, and circulars to regulate practices tantamount to fraud or market abuse.Continue Reading Obligations placed on stockbrokers to curb fraud and money laundering

Navigating OFAC Sanctions: Insights for Indian Businesses and Banks

As sanctions regimes become highly objective oriented, the Office of Foreign Asset Control (OFAC) is focused on ensuring enforcement and targeting entities involved in violating the sanctions, irrespective of their nationality. The inherent complexity, supplemented by an objective-focused approach, makes sanctions compliance even more important in today’s geopolitical climate. On June 12, 2024, the U.S. Department of the Treasury (Treasury Department) unveiled a comprehensive set of anti-money laundering measures aimed at enhancing transparency and preventing illicit financial activities. These measures, along with the OFAC advisory, bring significant implications for financial institutions worldwide by expanding grounds for imposing sanctions against Foreign Financial Institutions (FFIs) and limiting the provision of certain software technologies to Russia.[1]Continue Reading Navigating OFAC Sanctions: Insights for Indian Businesses and Banks

Tarsem Lal v Directorate of Enforcement: Supreme Court further clarifies PMLA framework

OVERVIEW:

Through a series of recent judgements, the Hon’ble Supreme Court has outlined limits to the Directorate of Enforcement’s (“ED”) powers under the Prevention of Money Laundering Act, 2002 (“PMLA”). Resultantly, issues that were rather ambiguous are now a lot clearer.Continue Reading Tarsem Lal v Directorate of Enforcement: Supreme Court further clarifies PMLA framework