offence of money-laundering

16. This Court in Y. Balaji v. Karthik Desari and Another35, while examining contours of Section 3 of the PML Act36, referred to the drafting note on self-laundering contained in the U.N. Model Law 2009, which states that the third party would be liable for money laundering even where the fundamental principles of domestic law require that it will not apply to persons who commit the predicate offence. In some countries, constitutional principles prohibit prosecuting a person both for money laundering and a predicate offence. However, in most common law countries, the fundamental principles do not prohibit application of money laundering offence to self-launderers. On dissection of the main part of Section 3, it is held that it postulates three ‘p’s, namely, the person, the process or activity, and the product. The process or activity consists of six parts – concealment, possession, acquisition, use, projecting or claiming the proceeds of crime as untainted property. The product, that is, the proceeds of the crime, has been defined in Section 2(u) of the PML Act, as a property derived or obtained directly or indirectly by a person as a result of criminal activity relating to a scheduled offence or the value of such property.37 As far as ‘person’ is concerned, it means those who directly or indirectly attempt to indulge; those who knowingly assist, or those who are knowingly a party, or those who are actually involved. On the above interpretation, this court held that the offence under Section 3 of the PML Act includes both the persons who commit the predicate or schedule offence and third party launderers.38 17. The judgment in Y. Balaji (supra), it is submitted by the appellant – Manish Sisodia, does not specifically examine whether ‘generation’ will be included in the six activities covered under the head ‘process or activity’. The second ‘p’ must relate to the activity or process with the third ‘p’, that is, the product, which is the proceeds of crime. However, we need not, in the present case, definitively pronounce on the said aspects as these issues and contentions will have to be examined threadbare by the trial court, or in an appropriate case by this Court

35 (2023) SCC Online SC 645.

36 Section 3 of the PML Act reads: Section 3 of the PML Act reads:

“3. Offence of money-laundering.—Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering. Explanation.—For the removal of doubts, it is hereby clarified that,— (i) a person shall be guilty of offence of money-laundering if such person is found to have directly or indirectly attempted to indulge or knowingly assisted or knowingly is a party or is actually involved in one or more of the following processes or activities connected with proceeds of crime, namely— (a) concealment; or (b) possession; or (c) acquisition; or (d) use; or (e) projecting as untainted property; or (f) claiming as untainted property, in any manner whatsoever; (ii) the process or activity connected with proceeds of crime is a continuing activity and continues till such time a person is directly or indirectly enjoying the proceeds of crime by its concealment or possession or acquisition or use or projecting it as untainted property or claiming it as untainted property in any manner whatsoever

37 Section 2(u) of the PML Act reads: “‘proceeds of crime’ means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property or where such property is taken or held outside the country, then the property equivalent in value held within the country or abroad

38 For the purpose of the present decision, we need not examine whether there is a conflict in the ratio in Y. Balaji (supra) and the ratio in Vijay Madanlal Choudhary (supra)