Context
- The Karnataka High Court has ruled that continuing proceedings under the Prevention of Money Laundering Act (PMLA), 2002, after conviction for the underlying predicate offence, does not amount to double jeopardy. The ruling arose from a 2016 demonetisation-related cheating case, where the accused had already been convicted of the predicate offences but faced pending Enforcement Directorate (ED) proceedings under the PMLA.
What is a Predicate Offence?
- A predicate offence refers to an offence listed in the Schedule to the PMLA.
- It is the underlying criminal activity that generates the “proceeds of crime”, which subsequently become relevant for a money-laundering prosecution.
- Example
- If a person commits a scheduled offence and obtains illegal money from it: Scheduled offence → Illegal proceeds → Subsequent laundering of those proceeds
- The first part constitutes the predicate offence, while the subsequent dealing with the proceeds may constitute the PMLA offence.
What Does the PMLA Actually Punish?
- Section 3 – Offence of Money Laundering
- Section 3 deals with the offence of money laundering.
- It covers involvement in a process or activity connected with proceeds of crime, including their concealment, possession, acquisition, use, or projecting/claiming them as untainted property.
- Section 4 – Punishment
- Section 4 prescribes the punishment for money laundering.
Karnataka HC’s Key Reasoning
- The High Court made a crucial distinction: Predicate Offence & Money Laundering Offence
- According to the Court, PMLA creates an independent statutory offence with its own legal ingredients.
- Therefore: Conviction for predicate offence is not equal with Conviction for money laundering
- The Court held that the prohibition against a second trial applies to the same offence, and does not prevent prosecution for a distinct offence under another statute.
What If the Predicate Offence Itself Fails?
- The Supreme Court has held that where the scheduled/predicate offence itself is finally quashed or the accused is finally acquitted in circumstances that eliminate the existence of the proceeds of crime, the foundation for the PMLA case may also disappear.
Q. With reference to proceedings under the Prevention of Money Laundering Act (PMLA), consider the following statements:
1. A predicate offence refers to an offence listed in the Schedule to the PMLA.
2. Money laundering under the PMLA is a distinct statutory offence from the predicate offence.
3. A person convicted of a predicate offence cannot subsequently be prosecuted under the PMLA due to Article 20(2) of the Constitution.
Which of the statements given above is/are correct?
A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3
Answer: A. 1 and 2 only
• Statement 1 is Correct: Scheduled offences listed in the PMLA Schedule form the underlying/predicate offences for the purposes of the Act.
• Statement 2 is Correct: Money laundering is a distinct offence under Section 3 of the PMLA.
• Statement 3 is Incorrect: Article 20(2) prohibits prosecution and punishment for the same offence more than once. A PMLA proceeding is not automatically barred merely because the person has already been convicted of the predicate offence.