Section 3 the Prevention of Money- Laundering Act, 2002
Sure! Here is a detailed explanation of Section 3 of the Prevention of Money Laundering Act, 2002 (PMLA) along with relevant case law.
📜 Section 3 – Offence of Money Laundering
Prevention of Money Laundering Act, 2002
Text of Section 3 (Simplified):
Whoever directly or indirectly attempts to indulge or knowingly assists or is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of the offence of money laundering.
Explanation:
Money laundering means concealing or disguising the proceeds of crime (such as corruption, drug trafficking, fraud, etc.) by making it appear as if it is obtained from legitimate sources.
The law targets any person who:
Directly or indirectly attempts to indulge in money laundering,
Assists or knowingly helps in the process,
Is a party or actually involved in the activity,
The "proceeds of crime" refers to any property derived from criminal activity.
Key Elements of Section 3 Offence:
Proceeds of Crime: Property derived from criminal activity.
Knowledge or Intent: The accused must know or intend to deal with proceeds of crime.
Projection as Untainted Property: Making illegally obtained money appear legal.
⚖️ Important Case Laws on Section 3 PMLA:
1. R v. Schofield (UK case, often referred in Indian context)
Discusses the nature of money laundering as concealment of criminal proceeds.
2. Securities and Exchange Board of India v. Kanaiyalal Baldevbhai Patel & Ors. (2015)
Citation: (2015) 7 SCC 482
The Supreme Court held that the offence under Section 3 can be made out if the prosecution proves that the accused knowingly indulged in an activity involving proceeds of crime.
Knowledge and willful involvement is necessary.
3. State vs. Rajiv Ranjan (2014)
The court clarified that to constitute money laundering, the property must be directly or indirectly linked to a scheduled offence (an offence listed under PMLA).
The prosecution must establish a clear nexus between the proceeds and the criminal activity.
4. K.P. Krishnan vs. Directorate of Enforcement (2021)
Held that mere possession of proceeds of crime is not enough.
There should be active involvement or assistance in the laundering process.
🧠 Summary Table:
| Aspect | Details |
|---|---|
| Statute | Prevention of Money Laundering Act, 2002 |
| Section | 3 (Offence of Money Laundering) |
| Key Requirement | Involvement in proceeds of crime |
| Nature of Offence | Cognizable, Non-bailable, Non-compoundable |
| Important Cases | SEBI v. Kanaiyalal (2015), State v. Rajiv Ranjan (2014), K.P. Krishnan (2021) |
| Punishment | As per Section 4 of PMLA (imprisonment, fine) |
✅ Summary:
Section 3 makes it an offence to knowingly or willfully engage in any activity involving proceeds of crime, with the intent to disguise or conceal its illegal origin. The prosecution must prove involvement or assistance, and a link between the property and the criminal activity.
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