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To catch money launderers the legislature has to amend Schedule Part A of Act

To catch money launderers the legislature has to amend Schedule Part A of Act
Illustration by Anthony Lawrence
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Above: Illustration by Anthony Lawrence

~By Aabad Ponda

The legislature seems to have omitted to incorporate offences of criminal misappropriation, punishable under section 403 and 404 of the Indian Penal Code (IPC) as well as offences of criminal breach of trust punishable under sections 406 to 409 of the IPC while drafting the entire schedule to the Prevention of Money Laundering Act (PMLA) 2002.

The schedule under the said Act gets its importance from Sections 2(x) and 2(y) of the said Act which define schedule and scheduled offence, respectively.

A conjoint reading of these two sub-sections along with the principle definition of proceeds of crime as defined under section 2(u) of the said Act and Section 3 of the said Act clearly indicates that unless an offence falls within any of the Schedules to the said Act, it gets eluded an excluded from the scope and ambit of the provisions of the PMLA. In other words, to invoke the provisions of the said Act, it is a mandatory prerequisite that there must be a scheduled offence viz. an offence falling in Parts A, B or C of the Schedule to the said Act.

Therefore classification and incorporation of offences in the Schedule is an extremely important legislative function which must be carried out to achieve the object of the Act.

The absence of offences of criminal misappropriation and criminal breach of trust from the Schedule to the PMLA Act, 2002 can cause hazardous effects and can allow criminals to escape from the clutches of law because of this legislative omission. The offences of criminal misappropriation and criminal breach of trust are serious economic offences. There is absolutely no logic in excluding such offences from the Schedule as it sends an unhealthy signal that persons who commit such crimes are immune from the provisions of the PMLA Act, 2002, no matter even if the quantum involved is running into hundreds of crores of Rupees.

This proposition gets further amplified from the fact that if a person committing such an offence is a public servant or a banker, factor, attorney, broker, agent etc. then even though such offences are serious and punishable up to life imprisonment, yet they escape the provisions of the Act. In contra distinction a mere receiver of the proceeds of criminal misappropriation or criminal breach of trust, who’s case fetches a maximum of three years punishment under Section 411 of the Indian Penal Code, will get covered under the Part A of paragraph 1 of the Schedule to the PMLA Act.

The law as it goes and reads therefore carves out a greater punishment for a receiver of stolen property than the person who actually generates the stolen property. This is obviously contrary to the spirit of the Act and the purpose it seeks to achieve. Public servants and powerful politicians who commit criminal breach of trust and misappropriation of money escape from the provisions of Act because of this legislative slip which needs to be seriously addressed to at the earliest.

—The author is an advocate, practising at the Bombay High Court on the criminal side

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