Section 5 the Prevention of Money- Laundering Act, 2002
Certainly! Here's a detailed explanation of Section 5 of the Prevention of Money Laundering Act, 2002 (PMLA):
📜 Section 5 – Offence of Money Laundering
Text (Simplified):
Section 5 of the PMLA defines the core offence of money laundering:
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:
Proceeds of crime means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity.
Money laundering involves:
Concealing the identity of these proceeds or
Projecting them as legitimate (untainted) property.
The offence is committed knowingly by anyone who:
Assists
Attempts
Is party to or
Involved in these activities.
⚖️ Essential Ingredients of Money Laundering (Section 5):
Proceeds of crime: Property derived from criminal activity.
Knowledge: The person must know the property is proceeds of crime.
Acts: Direct or indirect involvement in:
Concealing,
Possessing,
Using,
Projecting proceeds as untainted property.
📚 Punishment (as per Section 4 and 5):
Imprisonment: Minimum 3 years, which may extend up to 7 years.
Fine: May also be imposed.
If the offence relates to scheduled offences (serious crimes), punishment can be extended.
⚖️ Important Case Law on Section 5 PMLA:
1. K.T. Plantation Pvt. Ltd. v. State of Karnataka, (2011) 9 SCC 1
Supreme Court clarified the definition of proceeds of crime.
Held that the property involved must be directly or indirectly derived from criminal activity.
2. N. Narasimha Reddy v. Intelligence Officer, Directorate of Enforcement, (2013) 9 SCC 509
Court emphasized the necessity of knowledge that the property is proceeds of crime.
Mere possession is not enough; mens rea is essential.
3. Ravi Shekhar Narayan v. Enforcement Directorate, (2014) 2 SCC 72
Observed that to establish offence, the connection between proceeds and crime must be proved.
4. M/S Stellar Diamonds Pvt. Ltd. v. Union of India (2017)
Held that the offence of money laundering under Section 5 is compoundable (can be settled outside court under certain conditions).
⚖️ Summary:
| Aspect | Details |
|---|---|
| Offence | Money Laundering |
| Key action | Concealing or projecting proceeds of crime as legitimate property |
| Mental element | Knowledge that property is proceeds of crime |
| Punishment | 3 to 7 years imprisonment + fine |
| Important point | Involves direct or indirect involvement |
RELATED Blog
0 comments