By Bhaskar Kumar
The provisions of the Prevention of Money Laundering Act, 2002 [“PMLA” or “the Act”] have again caught attention when Dr. A.M. Singhvi argued that the Act is being retrospectively applied in ongoing INX Media case involving Mr. P. Chidambaram. Dr. Singhvi asserted that Mr. Chidambaram could not be tried for an offence that was not a scheduled offence under PMLA in 2007. However, the Solicitor General of India, Mr. Tushar Mehta, contended that the nature of offence is continuing in nature and hence, there is no retrospective application. Mr. Mehta further contended that as the money laundered is still in use and hence the accused is still deriving benefits out of the crime. It is pertinent to note that argument advanced by Mr. Singhvi derives its force from Article 20(1) of the Constitution India, which considers retrospective application of a penal law as a violation of fundamental rights. In light of these developments, this article is an endeavour to deliberate upon the understanding of continuing offence and determining that whether money laundering is a continuing offence.
Money Laundering is a Continuing Offence
It has often been argued that the offence of money laundering is a continuing offence and hence, the question of retrospectively in such circumstances cannot arise. In State of Bihar v. Deokaran Nenshi & Anr., the Supreme Court of India held that continuing offence is different from a normal offence because unlike the latter, which are committed once, a continuing offence is susceptible to continuance. A continuing offence constitutes a fresh offence every moment until the elements of the crime do not cease to exist. In Mahanivesh Oils & Foods Pvt. Ltd. vs. Directorate of Enforcement, the Delhi High Court observed that the first stage of the money laundering offence is the placement, where the criminals place the proceeds of the crime into normal financial system. The second stage is layering, where money introduced into the normal financial system is layered or spread into various transactions within the financial system so that any link with the origin of the wealth is lost. The last stage is integration, where the benefit or proceeds of crime are available with the criminals as untainted money. There is much merit in this description of money-laundering, and this also indicates that by its nature the offence of money-laundering has to be constituted by determinate actions and the process of money-laundering is over once the third stage of integration is complete. The Court further observed that a person concealing or coming into possession or bringing proceeds of crime to use would have committed the offence of money laundering when he came into possession or concealed or used the proceeds of crime. For any offence of money laundering to be alleged, such acts must have been done after the Act was brought in force. The proceeds of crime which had come into possession and projected and claimed as untainted prior to the Act coming into force, would be outside the sweep of the Act. In Hari Narayan Rai vs Union Of India & Ors., the Jharkhand High court held that only the date of laundering would be relevant for the purpose of section 3 of the Act and hence, only the date of procession of money for projecting it untainted is relevant for the purpose of law not the date of acquisition of money.
It is a settled principle of law that a person cannot be punished for an offence that was not penalized at the time of commission. However, in case of PMLA, the issue is thorny and it mentions ‘continuing’ offence in the light of amendment inserted by the Finance Act, 2019. The amendment added following provision to the act
(ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever.” (Emphasis supplied)
The amendment also expanded the ambit of the term ‘proceeds of crime’, which now includes assets created through any criminal activity irrespective of being mentioned in the Act. Section 3 of the Act deals with provisions relating to “offence of money laundering”. It previously read as follows:
“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 including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering.”
After the insertion of an explanation, a person will be guilty even if he is involved in even one of the processes mentioned in the amended section 3 of PMLA. The addition of the phrase ‘in any manner’ has resulted into rendering the activities connected to proceeds of crime a continuing offence. In Gokak Patel Volkart Ltd v. Dundayya Gurushiddaiah Hiremath, while discussing the meaning of continuing offence, the Supreme Court held that the question whether a particular offence is a ‘continuing offence’ must necessarily depend upon the language of the statute which creates that offence, the nature of the offence and the purpose intended to be achieved by constituting the particular act as an offence. Similarly, in Bhagirath Kanoria and Others v. State of M.P., the Supreme Court affirmed that whether a particular offence is continuing offence depends upon the nature of the statute, the language used, and most importantly on the purpose that is sought to be achieved by constituting the particular act as an offence.
If we look at the purpose behind the amendment, it was done after the Financial Action Task Force observed that the concealment, possession, acquisition and use of the proceeds of crime were not criminalized earlier under Section 3 of the PMLA. If the amended provision of Section 3 is read with Section 2(1)(u) of the Act, the process or activity connected with the proceeds of crime is a continuing offence till the time a person enjoys the proceeds of crime. In other words, the offence of money laundering shall not cease to be active until the fruits of the crime are totally enjoyed by the accused. In Sankar Dastidar v. Banjula Dastidar, the Supreme Court observed that imposition of the liability for the continuation of injury is the very essence of a continuing offence. If the wrongful act causes an injury which is complete, there is no continuing wrong through the damage resulting from the act may continue. Going in line with this logic, the offence of money laundering is a persistent offence until the benefits out of ‘proceeds of crime’ is enjoyed by the offender.
[The Author is a third-year B.A. LL.B. (Hons.) student at NLSIU, Bangalore.]