To comply with FATF norms, money laundering must be a standalone offence
To comply with FATF norms, money laundering must be a standalone offence
India will have to make money laundering an explicitly standalone offence to upgrade its compliance ahead of the on-site mutual evaluation by the Financial Action Task Force (FATF), which is due in November-December 2020.
Among the key recommendations of the FATF, an international body that sets global standards for fighting illicit finance, is that money laundering be made a standalone offence.
Despite several amendments, the Prevention of Money Laundering Act (PMLA) remains a predicate-offence-oriented law. This means a case under the Act depends on the fate of cases pursued by primary agencies such as the CBI, the Income Tax Department or the police. The latest instances are the verdicts in the 2G spectrum and Aircel-Maxis cases by the CBI courts, in which the money laundering angle probed by the Enforcement Directorate fell apart.
Karnataka case
On the issue of attachment of assets, however, the Karnataka High Court, in a 2016 judgment, appreciated the agency’s stand that money laundering was a standalone offence in view of Sections 5 and 8 amended in 2013, read with the definition of ‘property’ in Section 2(1)(v) of the Act.
The Enforcement Directorate is empowered to investigate the financial aspects of those crimes, as defined under the other penal laws, which are listed in the PMLA schedule.
The first FATF mutual evaluation of India was done in 2010 when the body expressed satisfaction with the measures taken by the country. However, in the same breath, the FATF highlighted, in its 256-page report, a number of lacunae in the then extant legislation, for which it suggested changes. Since then, a range of laws have been amended.
After analysing PMLA provisions, the FATF recommended that “legal measures are taken to allow for confiscation of the money laundered as subject of the ML [money laundering] offence and which is not contingent on conviction for the predicate offence [stand-alone ML offence].”
The report said: “The predicate offence conviction condition creates fundamental difficulties when trying to confiscate the proceeds of crime in the absence of a conviction of a predicate offence, particularly in a standalone ML case, where the laundered assets become corpus delicti [concrete evidence of a crime] and should be forfeitable as such.”
India will have to make money laundering an explicitly standalone offence to upgrade its compliance ahead of the on-site mutual evaluation by the Financial Action Task Force (FATF), which is due in November-December 2020.
Among the key recommendations of the FATF, an international body that sets global standards for fighting illicit finance, is that money laundering be made a standalone offence.
Despite several amendments, the Prevention of Money Laundering Act (PMLA) remains a predicate-offence-oriented law. This means a case under the Act depends on the fate of cases pursued by primary agencies such as the CBI, the Income Tax Department or the police. The latest instances are the verdicts in the 2G spectrum and Aircel-Maxis cases by the CBI courts, in which the money laundering angle probed by the Enforcement Directorate fell apart.
Karnataka case
On the issue of attachment of assets, however, the Karnataka High Court, in a 2016 judgment, appreciated the agency’s stand that money laundering was a standalone offence in view of Sections 5 and 8 amended in 2013, read with the definition of ‘property’ in Section 2(1)(v) of the Act.
The Enforcement Directorate is empowered to investigate the financial aspects of those crimes, as defined under the other penal laws, which are listed in the PMLA schedule.
The first FATF mutual evaluation of India was done in 2010 when the body expressed satisfaction with the measures taken by the country. However, in the same breath, the FATF highlighted, in its 256-page report, a number of lacunae in the then extant legislation, for which it suggested changes. Since then, a range of laws have been amended.
After analysing PMLA provisions, the FATF recommended that “legal measures are taken to allow for confiscation of the money laundered as subject of the ML [money laundering] offence and which is not contingent on conviction for the predicate offence [stand-alone ML offence].”
The report said: “The predicate offence conviction condition creates fundamental difficulties when trying to confiscate the proceeds of crime in the absence of a conviction of a predicate offence, particularly in a standalone ML case, where the laundered assets become corpus delicti [concrete evidence of a crime] and should be forfeitable as such.”