Predicate Offences under PMLA

Within the intricate labyrinth of legal frameworks, the concept of predicate offences, often interchangeably referred to as schedule offences, under the Prevention of Money Laundering Act (PMLA) assumes a position of utmost significance. This legal tapestry is designed with the intention of encompassing various forms of wealth earned through illicit means, thereby ensuring that illegal gains, as well as concealed legal income, are brought under its ambit. This article embarks on a journey to demystify the realm of predicate offences under PMLA, exploring their origins, implications, and the extensive array of offences they encapsulate.

The Genesis of Predicate Offences: Delving into the White Paper?

The legislative intent behind predicate offences under PMLA finds its roots in the pursuit of curbing not only illicitly gained wealth but also income legally acquired yet concealed from the watchful eyes of public authorities. This approach was elucidated in a White Paper published by the Ministry of Finance of the Government of India in May 2012. The paper shed light on the fact that money laundering doesn't merely pertain to the proceeds of criminal activities; it encompasses income that is concealed for specific reasons:

• Evading Statutory Contributions: Some individuals resort to concealing income to evade statutory contributions, thus subverting the mechanisms put in place for the welfare of society.
• Tax Evasion: Concealing income from tax authorities, be it income tax, excise duty, sales tax, stamp duty, or other levies, emerges as another significant facet of money laundering.
• Bypassing Industrial Laws: Certain entities engage in concealing income to avoid compliance with vital industrial laws, such as the Industrial Dispute Act, Minimum Wages Act, Payment of Bonus Act, Factories Act, and Contract Labour Act.
• Evading Compliance: Concealing income might also be employed to circumvent various laws and administrative procedures, creating a labyrinthine structure of subversion.

The inclusion of these legalizations within the purview of PMLA underscores the comprehensive approach of the legislation to tackle not only traditional illegal gains but also hidden legal income that subverts the socio-economic balance.

Interpreting the Schedule: Mapping Predicate Offences

The PMLA designates certain offences as predicate offences through the Schedule, consisting of three parts: Part A, Part B, and Part C. The Schedule has undergone amendments through various acts, expanding its scope and incorporating new offences. The intricate web of scheduled offences touches upon a wide spectrum of criminal activities, each carrying its significance.

Part A: This section enumerates offences under the Indian Penal Code (IPC) that are deemed as predicate offences. Ranging from criminal conspiracy, waging war against the government, counterfeiting, to offences related to extortion, robbery, forgery, cheating, and more, Part A delves into the core fabric of criminal activities.

Part B: Under this section, offences under the Customs Act become predicate offences if their value exceeds one crore rupees. This section focuses on violations related to customs duties and regulations.

Part C: This segment encompasses offences of cross-border implications, encompassing not only Part A's offences but also those against property under Chapter XVII of the Indian Penal Code. Additionally, the wilful attempt to evade taxes, penalties, or interest under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 also finds a place here.

Significance and Implications of Predicate Offences

The essence of predicate offences in the context of PMLA lies in their pivotal role in the larger framework of money laundering. A predicate offence essentially serves as the foundation upon which money laundering is built. In essence, the illegal gains generated by a predicate offence become the "dirty money" that is subsequently laundered to make it appear legitimate. This complex interplay emphasizes the inseparable link between predicate offences and money laundering.

The precedent set in the legal landscape by the Kavitha G. Pillai vs. The Joint Director, Director of Enforcement, Government of India case emphasizes the significance of predicate offences. This case highlighted that a predicate offence is the underlying criminal activity that generates proceeds, which, when laundered, gives rise to the offence of money laundering. This alignment between predicate offences and money laundering emerges as an integral aspect in maintaining international standards and coherence within the legal framework.

In Conclusion: Navigating the Legal Terrain

As one navigates through the intricate world of predicate offences under PMLA, the complexity and breadth of this legal realm become abundantly clear. The legislative intent to encompass both illegal gains and concealed legal income within the framework of money laundering showcases a comprehensive approach to combating financial wrongdoings. The meticulous classification of offences within the Schedule further accentuates the nuanced understanding of various criminal activities that can lead to money laundering.

As the legal landscape continues to evolve, understanding the crucial role of predicate offences in the realm of money laundering is essential. This understanding not only aids legal practitioners and scholars but also serves as a clarion call to society about the comprehensive efforts to curb financial wrongdoings and ensure socio-economic equilibrium. The journey through the depths of predicate offences underscores the complex yet vital interplay between legality, illegality, and the pursuit of justice.

By

Vijay Pal Dalmia, Advocate

Supreme Court of India & Delhi High Court

Email id: [email protected]

Mobile No.: +91 9810081079

Linkedin: https://www.dhirubhai.net/in/vpdalmia/

Facebook: https://www.facebook.com/vpdalmia

X (Twitter): @vpdalmia