Section 65 the Prevention of Money- Laundering Act with Case Law, 2002
Here's a detailed explanation of Section 65 of the Prevention of Money Laundering Act, 2002 (PMLA):
📜 Section 65 – Offences by Companies
Text (Simplified):
If a company commits an offence under the PMLA, every person who was in charge of, and responsible for, the conduct of the business of the company at the time the offence was committed, is also deemed guilty.
This applies unless the person proves that:
The offence was committed without their knowledge or
They exercised due diligence to prevent the offence.
If the guilty person is a director, manager, secretary, or other officer, they can be prosecuted individually.
This ensures that companies cannot evade liability by blaming individuals and vice versa.
🔍 Explanation and Key Points:
| Feature | Description |
|---|---|
| Applicability | Applies when a company commits an offence under PMLA. |
| Responsible persons | Directors, managers, secretaries, or officers in charge at the relevant time. |
| Presumption | These persons are presumed guilty unless they prove no knowledge or due diligence. |
| Objective | Prevent companies and their officials from escaping liability. |
⚖️ Importance:
Encourages corporate accountability.
Ensures due diligence is taken by company officials.
Prevents misuse of corporate veil to shield wrongdoing.
⚖️ Relevant Case Law:
1. Standard Chartered Bank v. Directorate of Enforcement (2010)
Court upheld the liability of company officials under provisions similar to Section 65.
2. Vodafone International Holdings BV v. Union of India (2012)
Although a tax case, the principle of due diligence by corporate officers was emphasized.
📘 Summary Table:
| Aspect | Details |
|---|---|
| Provision | Liability of company officers for offences |
| Who is liable? | Directors, managers, secretaries, officers |
| Defence available | Lack of knowledge or due diligence |
| Purpose | Ensure accountability in corporate offences |
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