Money-laundering integrity and threat to sovereignty

Mr Vikas Garg , Special Public Prosecutor, Enforcement Directorate (ED) Sheds Light on the Civil Side of The Prevention of Money Laundering Act, 2002

INVC News
New Delhi,

The Recent probing of Money laundering involving the death of cine star  Sushant Singh Rajput  by the Enforcement Directorate (ED) has md every common msan curious about this organization .

The Directorate of Enforcement, with its Headquarters at New Delhi is headed by the Director of Enforcement. There are five Regional offices at Mumbai, Chennai, Chandigarh, Kolkata and Delhi headed by Special Directors of Enforcement.

Money laundering is essential for criminal organizations who wish to use illegally earned money effectively. Dealing in large amounts of illegal cash is inefficient and dangerous. The criminals need a way to deposit the money financial institutions, yet they can only do so if the money appears to come from legitimate sources.

There are three steps involved in the process of laundering money: placement, layering and integration. Placement refers to the act of introducing “dirty money” (money obtained through illegitimate, criminal means) into the financial system in some way. Layering is the act of concealing the source of that money by way of a series of complex transactions and bookkeeping tricks. Integration refers to the act of acquiring that money in purportedly legitimate means.

In a recent webinar conducted by Law Colloquy  on August 14, 2020, Mr Vikas Garg—Special Public Prosecutor, Directorate of Enforcement Admitted Solicitor, Senior Courts of England & Wales—illuminated the audience on the purpose of The Prevention of Money Laundering Act, 2002 (PMLA) and the Trigger Point or break-even point for initiation of the investigation under PMLA. He also cast light on how and when Money Laundering becomes ‘Offence of Money Laundering’ and Attachments, Adjudication Proceedings thereof.

“Prevention of Money Laundering Act, 2002 was enacted when it was realised, the world over, that money-laundering poses a serious threat not only to the financial systems of the countries but also to their integrity and sovereignty. To obviate such threat, the Act was passed to prevent money laundering and to provide for confiscation of property derived from, or involved in, money laundering and for matters connected therewith or incidental there to” Said Mr Vikas Garg, Special Public Prosecutor, Enforcement Directorate (ED) while speaking at the webinar .  

“The key words for which this Act was passed are ‘Obviate such Threat’ for “Prevention of Money Laundering”.For completion of this  Crime, two important things are required, Mens Rea that is a Guilty Mind; and Actus Reus that is a Physical Act. Mens Rea, within its ambit, includes—Intention, knowledge, motive, recklessness and negligence. Moving deeper into the topic, Mr Garg explained the various stages of Crime as: Intention, Preparation, Attempt and commission” said Mr Garg.

“The word ‘Threat’ used in PMLA, if read with the second stage of Crime i.e. ‘Preparation’ gives a further meaning to the intent and purpose of Act.There are many offences in IPC, which are punishable at the stage of ‘Preparation’. Section 122 Waging against Govt. of India. Section 126 Committing Depredation on Territories of Power at Peace with the Govt. of India. Section 399 Making Preparation to Commit Dacoity. “ he said .

“Therefore, PMLA was enacted for obviating any such threat and even at that stage itself, a person is to be punished as per section 4 of the Act for the offence committed under section 3. This Act was enacted “when it was realised, the world over, that money-laundering poses a serious threat not only to the financial systems of the countries but also to their integrity and sovereignty”. He added  

Mr Vikas highlighted that the Act was enacted not only for obviating the threat to Financial Systems of the Countries but also for preventing any such Threat due to money laundering to the integrity and sovereignty of the Country.

“For initiation of the investigation under PMLA, the trigger point or break-even point for investigation under PMLA is not only the scheduled offences as given in the Act, but also an information in relation to any person who has committed any act which constitute money laundering, or is in possession of any proceeds of crime involved in money laundering, or is in possession of any records relating to money laundering, or is in possession of any property related to crime.” He said .

“The investigations conducted under the Act are two fold—Civil and Criminal.An Investigation conducted for the purposes of collection of evidence is Civil in nature and may amount to Attachment of Properties which are Proceeds of Crime as defined in Section 2 (1) (u) whereas the one that leads to Arrest for being involved in the above three processes of Placement, Layering, and Integration (Sections 3 and 19) or Criminal Prosecution (Section 45) or other legally authorized “coercive steps” (Sections 16 or 17, etc.) pertain to the criminal side of the Act.” He

It must also be noted that ‘Investigation’ includes all the proceedings under this Act conducted by the Director or by an authority authorised by the Central Government under this Act for the collection of evidence.

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