Article by Vijay Pal Dalmia, Advocate, Supreme
Court of India and Delhi High Court, Partner & Head of
Intellectual Property Laws Division, Vaish Associates Advocates,
India

In the intricate labyrinth of the Prevention of Money
Laundering Act (PMLA), one time period stands as a linchpin for
understanding the move of illicit positive aspects – “proceeds of
crime.” This time period, meticulously outlined throughout the act itself,
holds the important thing to unravelling the complicated internet of economic
malfeasance and prison exercise. This article delves into the
contours of “proceeds of crime,” deciphering its
multifaceted implications and the nuances which have emerged over
time.

Deciphering the Definition

The PMLA, in its quest to fight cash laundering, leaves no
room for ambiguity in defining “proceeds of crime.”
According to Section 2(u), it encompasses any property that’s
both immediately or not directly derived or obtained as a result of prison
actions linked to a scheduled offense. This entails a twofold
state of affairs: the property itself and its worth are essential components.
Additionally, if such ill-gotten positive aspects discover their approach overseas, the
PMLA extends its attain to property equal in worth, whether or not
held throughout the nation or abroad.

Illuminating the Explanation

The legislative panorama is a dynamic canvas, the place
interpretations typically sway the course of authorized understanding. In
2019, the Finance Act launched an evidence to the definition
of “proceeds of crime” beneath Section 2(u) of the PMLA.
This clarification serves as a guiding mild, dispelling doubts and
clarifying the already intricate idea. It unequivocally states
that the ambit of “proceeds of crime” extends past
property immediately linked to the scheduled offense. It contains any
property, immediately or not directly derived from any prison exercise
associated to the scheduled offense. This serves as a clarification of
current definitions, a highlight on the interconnectedness of
prison actions, and their monetary implications.

The Retroactivity Conundrum

The introduction of the reason raises a pertinent query
– does it apply retrospectively or prospectively? While the
clarification itself would not explicitly specify, its
clarificatory nature and the context wherein it is launched
recommend a retrospective intent. As it merely clarifies what’s
already inherent within the definition of “proceeds of
crime,” the logical inference leans towards retroactivity. The
authorized precedent, as set by the High Court of Judicature for
Rajasthan Bench at Jaipur¹, underscores the character of an
clarification inside a statute, which aligns with this
interpretation.

Unpacking the Scope: “Any Criminal Activity”

The PMLA, in its pursuit of curbing monetary wrongdoing, casts
a large web with the time period “any criminal activity.” While
the act would not explicitly outline this time period, its implications
are far-reaching. This umbrella time period encompasses actions
immediately or tangentially linked to the scheduled offense. This
might span a spectrum of actions, from concealment, possession,
acquisition, use, to projecting or claiming untainted property. To
illustrate, contemplate Person A, who acquires tainted funds of Rs. 1
crore by way of a scheduled offense. If Person A makes an attempt to cleanse
this cash by investing it in a checking account, any curiosity accrued
on this tainted sum additionally falls throughout the purview of “proceeds
of crime.”

Navigating the Complex Terrain

The time period “proceeds of crime” encapsulates a posh
interaction of authorized and monetary dynamics. It serves because the
linchpin connecting prison actions to the monetary realm,
making it a focus within the battle towards cash laundering. The
elucidating clarification appended to the definition enhances the
readability of interpretation, eradicating the veil of ambiguity that
may shroud its understanding. The introduction of the reason
echoes the legislature’s intent to strengthen the online round
these trying to legitimize their ill-gotten positive aspects.

Conclusion: A Beacon within the Legal Fog

In the symphony of authorized intricacies, “proceeds of
crime” emerges as a resonating notice, harmonizing legislative
intent and sensible implementation. The PMLA, fortified by this
time period, strives to discourage and apprehend those that search to profit from
prison actions. The clarification acts as a guiding beacon,
casting mild on the labyrinthine pathways of economic wrongdoing.
As the authorized panorama evolves, the definition of “proceeds of
crime” stands as a testomony to the lawmakers’ dedication
to staying forward within the battle towards cash laundering, whereas additionally
upholding the rules of justice and fairness.

Footnote

1. Civil Writ Petition No. 21751/2017,
(https://bit.ly/2LgxWGt ).

By

Vijay Pal Dalmia, Advocate

Supreme Court of India & Delhi High
Court

Email id: vpdalmia@vaishlaw.com

Mobile No.: +91 9810081079

Linkedin:
https://www.linkedin.com/in/vpdalmia/

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Twitter: @vpdalmia

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