Supreme Court Clarifies Scope of Criminal Conspiracy under Prevention of Money Laundering Act

November 30, 2023

GS Paper II Indian Polity and Governance

Context: The Supreme Court has ruled that a person cannot be charged with criminal conspiracy under the Prevention of Money Laundering Act (PMLA) unless the conspiracy is to commit a crime specifically listed in the Schedule of the Act.

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Court Ruling: The court ruled that the offense under Section 120B of the IPC will only be considered a scheduled offense if the criminal conspiracy is to commit an offense already included in Parts A, B, or C of the Schedule.
ED’s Argument Rejected: The court rejected an argument made by the Enforcement Directorate (ED) that Section 120B of the Indian Penal Code, which deals with criminal conspiracy, is included in Part A of the Prevention of Money Laundering Act Schedule of Offences.
- The ED argued that this means that even if the conspiracy is to commit an offense not listed in the Schedule, it can still be considered a scheduled offense.

Enforcement Directorate

The Enforcement Directorate is a multi-disciplinary organization mandated with the investigation of offenses of money laundering and violations of foreign exchange laws.

The statutory functions of the Directorate include the enforcement of the following Acts:

The Prevention of Money Laundering Act, 2002 (PMLA)
The Foreign Exchange Management Act, 1999 (FEMA):
The Fugitive Economic Offenders Act, 2018 (FEOA):
The Foreign Exchange Regulation Act, 1973 (FERA):
Sponsoring agency under COFEPOSA: Under the Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974 (COFEPOSA), this Directorate is empowered to sponsor cases of preventive detention concerning contraventions of FEMA.

Court’s Interpretation: The court found that the ED’s interpretation would defeat the legislative intent of the Prevention of Money Laundering Act, which is to make only a few select offenses schedule offenses.
- The court also stated that not every crime that may generate proceeds of crime should be considered a scheduled offense.

About Prevention of Money Laundering Act 2002:

It is a criminal law enacted 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 thereto.
ED has been given the responsibility to enforce the provisions of the Prevention of Money Laundering Act by investigating to trace the assets derived from proceeds of crime, to attach the property provisionally and to ensure prosecution of the offenders and confiscation of the property by the Special court.

List of Offences

Under Prevention of Money Laundering Act, the commission of any offense (mentioned in Part A and Part C of the Schedule of Prevention of Money Laundering Act) will attract the provisions of Prevention of Money Laundering Act.
- Part A: It enlists offenses under various acts such as the Indian Penal Code, Narcotics Drugs and Psychotropic Substances Act, Prevention of Corruption Act, Antiquities and Art Treasures Act, Copyright Act, Trademark Act, Wildlife Protection Act, and Information Technology Act.
- Part C: It deals with trans-border crimes and reflects the dedication to tackling money laundering across global boundaries.