The expression “proceeds of crime” is the heart of the Prevention of Money Laundering Act, 2002 (PMLA). Accordingly, the definition of the expression “proceeds of crime” is set out under section 2(1)(u) of PMLA, 2002.
In this article, you will learn about the definition of “proceeds of crime” under the Prevention of Money Laundering Act, 2002, which refers to any property obtained through criminal activities and how it is associated with money laundering.
What Is the Meaning of “Proceeds of Crime”?
The term “proceeds of crime” is defined as any property directly or indirectly acquired by an individual due to a criminal activity relating to a scheduled offence. It includes the value of the property and any equivalent value held within the country if the original property is taken or held outside the country. It is important to note that “proceeds of crime” also encompass any property obtained due to criminal activity relating to the scheduled offence.
This definition is to be interpreted in conjunction with section 2(1)(v), which defines “property” as any property or assets, tangible or intangible, movable or immovable, corporeal or incorporeal, including deeds and instruments that show title or interest in such property or assets, regardless of location. Additionally, the explanation to section 2(1)(v) specifies that “property” can also include any property used in the commission of an offence under the PMLA or any of the scheduled offences.
Case Laws
Here are some important case laws that deal with the “proceeds of crime” under various legal contexts.
Rose Valley Real Estate and Constructions Ltd. vs Union of India (DB), 2015 Cri LJ 4850
A property’s value or any indirect benefits from illegal action that constitutes a “scheduled offence” are also included in the definition of proceeds of crime. Therefore, the amount directly collected from the public through the illegal debenture scheme would not only be considered a part of the proceeds of crime under the SEBI (Securities and Exchange Board of India) Act but also any additional benefits or usufruct that have directly or indirectly accrued to the credit of the Company.
Mrs Nalini Chidambaram vs Directorate of Enforcement, 2018 (2) Madras LJ (Criminal) 430
It is only possible to determine the “Proceeds of Crime” after the investigation and the complaint have been filed.
Aman Krishanlal S S/o. Shri Krishan Lal S vs Assistant Director (Gujarat), 2015 (4) Crimes 295
The income would not fall within the proceeds of crime due to the applicant’s illegal actions, such as cricket betting.
J Sekar vs Union of India (DB), 2018 Cri LJ 1720
The phrase “value of any such property” refers to the worth of a property acquired through unlawful means, whether directly or indirectly. Although the actual property may no longer be accessible, its equivalent value, whether stored in cash or another asset, would still be available for attachment.
S Ramesh Pothy vs Adjudicating Authority (Madras), 2017 (1) CTC 408
The phrase “any property and any person” is used in this section. However, the section does not mention whether the relevant property must be in the hands of the alleged criminal at the period in question.
Indian Bank, Rep. by its Chief Manager vs Govt. of India (Madras), 2012 (4) CTC 225
The elements of the phrase “proceeds of crime” are satisfied since:
- (i) The corporation is accused of committing planned offences, and
- (ii) The property in question is purportedly the product of criminal conduct connected to scheduled offences.
Moreover, it can be said that the property was the proceeds of a crime because the bank paid the full transaction consideration. Therefore, in prima facie, the property appears to be the proceeds of a crime, and it is up to the accused to prove otherwise before the criminal court.
C Chellamuthu vs Deputy Director, Prevention of Money Laundering Act (Madurai Bench), 2016 (1) Madras LJ (Criminal) 717
When “B” purchased a piece of property legitimately with a lawful selling consideration while unaware that the seller was facing criminal charges, the property no longer qualifies as “proceeds of crime.”
AK Samsuddin vs Union of India, 2016 (3) Kerala LT 874
Even though it is a requirement under the Act that a scheduled offence be committed before starting legal action, money laundering is a separate crime from those listed on the schedule. According to the Act’s structure, it solely addresses the money laundering of those who have obtained it via the commission of one of the scheduled offences.
B Rama Raju vs Union of India, (AP)(D.B.), 2011 (4) Andhra L D 383
The definition of “proceeds of crime” is not arbitrary and invalid because it includes property obtained, derived from, or in possession of a person who is not accused and is therefore unfair to innocent people. To further the Act’s overarching goals, the term “proceeds of crime” is defined broadly under the Act.
Conclusion
“Proceeds of crime” refers to any property or money obtained through criminal activity.
The Prevention of Money Laundering Act, 2002 in India has defined the term “proceeds of crime” as any property derived or obtained directly or indirectly by any person as a result of criminal activity. The Act has been enacted to combat money laundering and other financial crimes.
It is essential to identify and seize the proceeds of crime to disrupt the financial operations of criminal organizations and prevent the laundering of illegally obtained funds. Therefore, the Prevention of Money Laundering Act 2002 is a powerful legislative tool in the fight against money laundering and other financial crimes.
When analyzing the reach of the authority to attach such proceeds of crime, it is essential to keep in mind the broad definition of the term “proceeds of crime.”
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