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Offences Under Prevention of Money Laundering Act, 2002(PMLA).

 

What is Money Laundering?.

Money Laundering refers to the conversion of money which has been illegally obtained, in such a way that it appears to have originated from a legitimate source.

What is the Law to regulate for Money Laundering in India ?.

Prevention of Money Laundering Act, 2002 is an Act of the Parliament of India enacted by the NDA government to prevent money-laundering and to provide for confiscation of property derived from money-laundering.

 Offence of money-laundering.-

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

Punishment for money-laundering.-

Section 4 :Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine which may extend to five lakh rupees: Provided that where the proceeds of crime involved in money-laundering relates to any offence specified under paragraph 2 of Part A of the Schedule, the provisions of this section shall have effect as if for the words “which may extend to seven years”, t e words “which may extend to ten years” had been substituted.

   Section : 5 : Attachment of property involved in money-laundering.-

  1. Where the Director, or any other officer not below the rank of Deputy Director authorised by him for the purposes of this section, has reason to believe (the reason for such belief to be recorde in writing), on the basis of material in his possession, that-
  2. any person is in possession of any proceeds of crime;
  3. such person has been charged of having committed a scheduled offence; and
  4. such proceeds of crime are likely to be concealed, transferred or dealt with in any manner which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter, he may, by order in writing, provisionally attach such property for a period not exceeding ninety days from the date of the order, in the manner provided in the Second Schedule to the Income-tax Act, 1961 (43 of 1961) and the Director or the other office so authorised by him, as the case may be, shall be deemed to be an officer under sub-rule (e) of rule 1 of that Schedule: Provided that no such order of attachment shall be made unless, in relation to an offence under-
  5. Paragraph 1 of Part A and Part B of the Schedule, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974); or
  6. Paragraph 2 of Part A of the Schedule, a police report or a complaint has been filed for taking cognizance of an offence by the Special Court constituted under sub-section (1) of section 36 of the Narcotic Drugs and Psychotropic Substances Act, 1985 (61 of 1985).
  7. The Director, or any other officer not below the rank of Deputy Director, shall, immediately after attachment under sub-section (1), forward a copy of the order, along with the material in his possession, referred to in that sub-section, to the Adjud cating Authority, in a sealed envelope, in the manner as may be prescribed and such Adjudicating Authority shall keep such order and material for such period as may be prescribed.
  8. Every order of attachment made under sub-section (1) shall cease to have effect after the expiry of the period specified in that sub-section or on the date of an order made under sub-section (2) of section 8, whichever is earlier.
  9. Nothing in this section shall prevent the person interested in the enjoyment of the immovable property attached under sub-section (1) from such enjoyment. Explanation.-For the purposes of this sub-section, “person interested”, in relation to any immovable property, includes all persons claiming or entitled to claim any interest in the property.
  10. The Director or any other officer who provisionally attaches any property under sub-section (1) shall, within a period of thirty days from such attachment, file a complaint stating the facts of such attachment before the Adjudicating Authority.

          Search and seizure.-

  1. Where the Director, on the basis of information in his possession, has reason to believe (the reason for such belief to be recorded in writing) that any person-
  2. has committed any act which constitutes money-laundering, or
  3. is in possession of any proceeds of crime involved in money-laundering, or

iii.        is in possession of any records relating to money-laundering, then, subject to the rules made in this behalf, he may authorise any officer subordinate to him to-

  1. enter and search any building, place, vessel, vehicle or aircraft where he has reason to suspect that such records or proceeds of crime are kept;
  2. break open the lock of any door, box, locker, safe, salmirah or other receptacle for exercising the powers conferred by clause (a) where the keys thereof are not available;
  3. seize any record or property found as a result of such search;
  4. place marks of identification on such record or make or cause to be made extracts or copies therefrom;
  5. make a note or an inventory of such record or property;
  6. examine on oath any person, who is found to be in possession or control of any record or property, in respect of all matters relevant for the purposes of any investigation under this Act:

Provided that no search shall be conducted unless, in relation to an offence under-

  1. Paragraph 1 of Part A and Part B of the Schedule, a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973 (2 of 1974); or
  2. Paragraph 2 of Part A of the Schedule, a police report or a complaint has been filed for taking cognizance of an offence by the Special Court constituted under sub-section (1) of section 36 of the Narcotic Drugs and Psychotropic Substances Act, 1985 61 of 1985).
  3. The authority, who has been authorised under sub-section (1) shall, immediately after search and seizure, forward a copy of the reasons so recorded along with material in his possession, referred to in that sub-section, to the Adjudicating Authority n a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such reasons and material for such period, as may be prescribed.
  4. Where an authority, upon information obtained during survey under section 16, is satisfied that any evidence shall be or is likely to be concealed or tampered with, he may, for reasons to be recorded in writing, enter and search the building or place where such evidence is located and seize that evidence: Provided that no authorisation referred to in sub-section (1) shall be required for search under this sub-section.
  5. The authority, seizing any record or property under this section, shall, within a period of thirty days from such seizure, file an application, requesting for retention of such record or property, before the Adjudicating Authority.

        Power to arrest.-

  1. If the Director, Deputy Director, Assistant Director or any other officer authorised in this behalf by the Central Government by general or special order, has on the basis of material in his possession, reason to believe (the reason for such belief to be recorded in writing) that any person has been guilty of an offence punishable under this Act, he may arrest such person and shall, as soon as may be, inform him of the grounds for such arrest.
  2. The Director, Deputy Director, Assistant Director or any other officer shall, immediately after arrest of such person under sub-section (1), forward a copy of the order along with the material in his possession, referred to in that sub-section, to the Adjudicating Authority in a sealed envelope, in the manner, as may be prescribed and such Adjudicating Authority shall keep such order and material for such period, as may be prescribed.
  3. Every person arrested under sub-section (1) shall, within twenty-four hours, be taken to a Judicial Magistrate or a Metropolitan Magistrate, as the case may be, having jurisdiction: Provided that the period of twenty-four hours shall exclude the time necessary for the journey from the place of arrest to the Magistrate’s Court.

         What is the new Amendment in PMLA.

       Government introduces Bill to amend the Prevention of Money-laundering Act,          2002 through Finance Act, 2018 

Following amendments have been made in the Prevention of Money-laundering Act,   2002 (PMLA) through Finance Act 2018. The Amendments aim at further enhancing the   effectiveness of the Act, widen its scope and take care of certain procedural difficulties   faced by the Enforcement Directorate in prosecution of PMLA cases. The major   amendments proposed are as follows:

            Measures to enhance effectiveness of PMLA

  1. Amendment in definition of “proceeds of crime”:The definition of “proceeds of crime” in PMLA was amended in 2015 to include “property equivalent held within the country” in case proceeds of crime is taken out or held “outside the country”. The present amendment shall allow to proceed against property equivalent to proceeds to crime held outside the country also.
  2. Amendment in bail provisions: Amendment proposed in Section 45(1) would make the applicability of bail conditions uniform to all the offences under PMLA, instead of only those offences under the schedule which are liable to imprisonment of more than 3 years. This will be a significant step forward in delinking the proceedings against scheduled offences and Money laundering  offences under PMLA.

Further limit of Rs.one crore shall allow court to apply bail provisions more leniently to less serious PMLA cases.

  1. Corporate frauds included as Scheduled offence:Section 447 of Companies Act is being included as scheduled offence under PMLA so that Registrar of Companies in suitable cases would be able to report such cases for action by Enforcement Directorate under the PMLA provisions. This provision shall strengthen the PMLA with respect to Corporate frauds.
  2. Measures to enhance effectiveness of investigations

Section 5(1) of the Act provides that every order of provisional attachment passed by an officer of Enforcement Directorate shall cease to have effect after 180 days from the date of the provisional attachment order, unless confirmed by the Adjudicating Authority under PMLA within that period. The section is proposed to be amended to include the period of stay in this time limit of 180 days and also further period of not more than 30 days to take care of delays if any in communication of judicial orders.

  1. Under the existing provision of Section 8(3), presently, the Directorate is required to file prosecution immediately after confirmation by Adjudicating Authority. Proposed amendment gives 90 days more for investigation to ED, before prosecution is filed.
  2. New sub-section (2) of section 66 is being introduced to provide for clear guidelines to share the information relating to contraventions of other laws noticed during investigation by ED, with concerned authorities under the said Acts. This shall enable exchange of information among agencies and enhance effectiveness of efforts against black money.
  3. Measures for restoration of property of persons adversely affected by PMLA investigation

Present provisions under Section 8(8) allow distribution of confiscated property to the rightful claimants, only after the trial is complete. Present amendment allows Special Court, if it thinks fit, to consider the claims of the claimants for the purposes of restoration of such properties even during trial also, in such manner as may be prescribed.


 

Bail rejected in PMLA Cases Judgment.

IN THE HIGH COURT OF JHARKHAND AT RANCHI

B.A. No. 36 of 2011

Vikash Kumar Sinha                                     ……Petitioner

Versus

The State of Jharkhand through

Directorate of Enforcement                        …..Opposite Party

CORAM:-HON’BLE MR. JUSTICE R.K. MERATHIA

For the Petitioner : Mr.   Y.V. Giri, Sr. Advocate

Mr.   Sameer Saurav, Mr. Siddhartha Ranjan,

Mr.   Rakesh Ranjan, Mr. Amit Kumar,

Mr.   Vinay Prakash, Advocates

For Directorate

of Enforcement : Mr.

A.K. Das, Advocate

: Mr.

Chandrajit Mukherjee, Advocate

——–

C.AV.On 25.2.2011                   Delivered on 11/3/2011

 

7/ 11/3/2011

This application has been filed for grant of bail in connection with Complaint Case No. 1 of 2009, corresponding to Enforcement Case Information Report-E.C.I.R./02/PAT/09/AD registered under section 4 of the Prevention of Money Laundering Act, 2002 ( Money Laundering Act for short).

  1. The prayer for bail of the petitioner was earlier rejected by this Court on 24.05.2010 vide B.A. No. 823 of 2010, inter alia observing as follows;-

It appears that a complaint has been filed by the Assistant Director- II of Directorate of Enforcement under section 45 of the Prevention of Money Laundering Act, 2002 before the Special Judge Ranchi (under the Prevention of Money Laundering Act) against the petitioner Vikash Sinha. It further appears that information was filed under the scheduled offences of Prevention of Money Laundering Act, 2002, i.e. under sections 420, 423,424,409 and 120B of the Indian Penal Code as well as under sections 7,10 and 13 of the Prevention of Corruption Act and now for the offence under the Money Laundering Act punishable under section 4 of the Prevention of Money Laundering Act, 2002 against Sri Madhu Koda, Shri Kamlesh Singh, Shri Bhanu Pratap Shahi, Shri Bandhu Tirkey, Shri Binod Sinha, Shri Sunil Kumar Sinha, Shri Vikas Sinha, Shri Sanjay Chaudhary and Shri Dhananjay Chaudhary.

The investigation against this petitioner was complete and thereafter complaint was filed before the Special Judge, Ranchi (under the Prevention of Money Laundering Act), stating therein that the investigation of the case against other accused persons was going on. Accordingly, leave, as prayed, for filing further complaint against other accused persons was granted by the Special Judge, Ranchi ( under the Prevention of Money Laundering Act).

So far as the petitioner is concerned, the learned Special Judge Ranchi (under the Prevention of Money Laundering Act), on the basis of the complaint as well as the materials collected during the course of investigation, took cognizance against the petitioner under section 3 of the Money Laundering Act, 2002 punishable under section 4 of the said Act.

The allegations made in the complaint, in short, are that the accused persons in collusion and connivance with each other acquired huge properties. Some of the accused persons were even public servants in the State of Jharkhand. The accused persons accumulated moveable and immoveable properties and assets not only in India but in abroad also. Those properties were acquired otherwise and were not included in their disclosed assets. Their criminal acts indicated misappropriation of public money in the capacity of public servants. One of the co- accused Binod Sinha is the own brother of this petitioner Vikash Kumar Sinha. It is alleged that this petitioner jointly with his brother Binod Sinha acquired the properties and assets; the details of which have been given in the complaint.

The present case is a very sensitive case, in which high profile persons like Ex. Chief Minister of the State is one of the accused. The allegation is that he along with other accused persons in collusion and connivance with each other named in the report have acquired huge moveable and immoveable properties and assets not only in India but in abroad also. The investigation against other accused are still in progress and, therefore, in my view if the petitioner is released on bail, he may certainly try to influence the further investigation and he may try to tamper with the evidence or may try to destroy the evidence.

Considering the gravity of the offence and nature of the crime committed by the accused persons as well as for the reasons stated herein above, in my view the petitioner does not deserve bail. Accordingly, the prayer for bail of the petitioner is rejected and this application is dismissed…..”.

  1. Against the said order, petitioner moved before Hon’ble Supreme Court vide S.L.P. ( Cr) No. 5084 of 2010, which was dismissed on 17.09.2010, with the following order.

” Heard learned senior counsel appearing on behalf of the petitioner as well as learned ASG appearing on behalf of Respondent no. 2.

The Special Leave Petition is dismissed. However, liberty is given to the petitioner to renew his bail application after three months before the appropriate court.”

  1. Mr. Y.V. Giri, learned senior counsel appearing for the petitioner, submitted as follows. The main/C.B.I. case was based on Media Reports. In that case, there was no allegations against the petitioner. In the present case, i.e. E.C.I.R. Case No. 02/2009 registered under the Money Laundering Act, petitioner has been made an accused on the basis of his alleged confession/statements made before the Income tax authorities, about which the petitioner made statement later that such statements/confessions were recorded under coercion. The statements made before the Income tax authorities are relevant for the purpose of taking action under that Act. He relied on 1992 Cr. L.J. 2781__K.T.M.S. Mohammad Vs. Union of India. The concerned authorities have not taken any action against co-accused persons, against whom, there are similar allegations such as Mr. Bandhu Tirkey and Bhanu Pratap Sahi, who are sitting M.L.As. The rigorous of Section 45 of the Money Laundering Act is applicable to the offences under part A of the Schedule of the Act, whereas no part of the schedule is applicable to the petitioner on the basis of the offences alleged and therefore the provisions of Cr.P.C. with regard to bail will apply to the petitioner. In the charge-sheet submitted by the C.B.I., the alleged amount involved is about Rs.7 crores covering all the accused persons. Only because petitioner is brother of co-accused Binod Sinha, he has been made an accused in this case. The papers supplied to the petitioner are not readable. The trial is also not progressing. The petitioner was apprehended on 6.11.2009 and since then he is in jail for about 15 months.

In similar circumstances, one Kamlesh Singh was granted bail in Vigilance Case No. 9 of 2009, which is the basis of this case. Shri Laloo Prasad Yadav was also granted bail after he remained in jail for about 6 months vide (2002) 9 SCC 731. One Manoj Singh was also granted bail by this Court, against whom, there were allegations under Money Laundering Act involving 12 crores, on the ground that he has remained in jail for about six months.

The order of the High Court rejecting bail of the petitioner earlier has merged in the said order of the Supreme court, in which petitioner was given liberty to apply for bail after three months by order dated 17.9.2010. Petitioner will cooperate in trial. In these circumstances, petitioner should be enlarged on bail.

  1. Mr. A.K. Das, learned counsel appearing for Directorate of Enforcement, vehemently opposed the prayer for bail and submitted as follows. This case was instituted against several accused persons including Shri Madhu Kora, ex Chief Minister, Jharkhand and the petitioner mainly alleging inter alia that during the Chief Ministership of Shri Madhu Kora, he along with co-accused persons acquired huge illegal money ( proceeds of crime) through corrupt and illegal means and committed offences, which are covered under schedule of Money Laundering Act, in connivance with his close associates, including petitioner and others. The proceeds of crime so accumulated were invested not only in India but in several other countries so as to project the same as untainted property such as Dubai, Hongkong, Thailand, Singapur and Sweden.

The modus operandi adopted by the accused persons has been explained in detail by Shri S.K. Naredi ( Chartered Accountant), who is one of the important witnesses in this case- that some Chartered Accountant/Entry Operators maintained several files of Companies which only exist on paper for providing accommodation entries to the intending persons who want to induct their undisclosed income in the books of accounts of the Company as share capital/unsecured loan.

During investigation, it was found that the petitioner gave about Rs.45 crores to one Mr. B.N. Gupta, an employee of Mr. Naredi and the same was inducted in several such companies running on paper.

By such proceeds of crime, the capital of M/s Emmar Alloys Pvt. Ltd., a paper company of the petitioner was increased and 15% of the share of the Company was transferred in the name of the co-accused- Vijay Joshi, who admitted in his statement that he did not pay any consideration in lieu of acquisition of its share.

The proceeds of crime were rapidly allowed to change hands. About Rs.15 crores was spent on construction/acquisition of industry/ property only. The petitioner for the purpose of laundering the proceeds of crime has become Director in about 8 companies. He was examined under the provisions of Money Laundering Act and Income Tax Act. He admitted his guilt, which finds support from other materials available on record.

Other accused persons are in custody in this case. Petitioner is also deeply and actively involved in the offence. Further investigation is going on in India and in foreign countries. Petitioner cannot complain that the main/CBI case was based on media reports, as on investigation, such reports have been found correct to a great extent. Thus the Enforcement Department had reasonable belief about commission of offence. Some of the accused persons have not been arrested as investigation against them is going on. Referring to section 3 of the Money Laundering Act, he submitted that the petitioner is directly involved in the process and actively connected with the proceeds of crime for projecting it as untainted property. Petitioner may hamper and tamper with the evidences of this case, in which high profile person including ex Chief Minister are involved. He also referred to the order dated 26.10.2010, passed in S.L.P ( Crl) Nos. 6995-6999/2010 in the case of CBI, Hyderabad Vs. B. Ramaraju and others. He lastly submitted that petitioner is not entitled to bail, even on the basis of liberty given by Hon’ble Supreme Court, as he himself is delaying the trial.

  1. It will not be proper for this Court to express any opinion on the said submissions of the parties as it may prejudice them during trial. Prima facie, the submissions made on behalf of the petitioner are not acceptable. During investigation, Media reports have been found substantially correct. Petitioner confessed his guilt during investigation, which finds support from other materials available on record. The judgment of K.T.M.S. Mohammad ( supra) relied by the petitioner is of no help to him. It was rendered in altogether different context. The orders granting bail to other accused persons in other criminal cases in the facts and circumstances of those cases by different courts are of no help to the petitioner.

It is true that liberty was given by the Hon’ble Supreme Court to the petitioner to renew his bail application after three months but, from the order sheet of trial court, it appears that petitioner is trying to delay the trial on flimsy grounds. On the other hand, bail is prayed on the ground of the period of detention and the liberty given by Hon’ble Supreme Court.

Prima facie, it is a case of loot and laundering of huge public money in which the petitioner is also actively involved. After hearing the parties at length and considering the entire matter carefully, in my opinion, petitioner does not deserve bail in this case in view of the seriousness of the charges, the materials available in support thereof, and the provisions of Money Laundering Act, as noticed above. Accordingly, this bail application is rejected.

 

(R .K. Merathia, J) Rakesh/

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