Spc Published Clarifications On Money-Laundering Elements Where Proceeds Cross Multiple Jurisdictions
1. Directorate of Enforcement vs Padmanabhan Kishore (Supreme Court, 2022)
Facts:
Padmanabhan Kishore was accused of giving bribes in a corruption case. The question was whether the money held by him, before being actually handed over as bribe, constituted “proceeds of crime” under PMLA.
Issues:
Can money in possession of a bribe-giver, not yet delivered, be “proceeds of crime”?
What is the role of intent in defining proceeds of crime?
Supreme Court Clarification:
Money becomes proceeds of crime only when it is used in furtherance of the scheduled offence.
Mere possession of money with intent to bribe does not automatically taint the money unless intent is clearly established.
Established that intent at the time of transfer is critical.
Implication:
For cross-border cases, this principle matters: funds transferred abroad must be shown to have been derived from criminal activity and intended for laundering or concealment to be considered proceeds of crime.
2. Pradeep Nirankarnath Sharma vs Directorate of Enforcement (Supreme Court, 2025)
Facts:
Pradeep Sharma was involved in transactions moving funds between multiple countries. The issue was whether PMLA applies to funds originating before the Act was enacted.
Issues:
Does PMLA have retrospective effect?
How does the “continuing offence” principle apply to cross-border proceeds?
Supreme Court Clarification:
Money laundering is a continuing offence.
Even if the predicate crime predates PMLA, ongoing laundering (possession, use, concealment) falls under the Act.
Transactions across jurisdictions are considered part of the continuing offence if connected to proceeds of crime.
Implication:
Strengthens enforcement in international money-laundering cases, as long as there is a link to ongoing activities in India.
3. Nirav Modi vs Enforcement Directorate (Supreme Court, 2021)
Facts:
Nirav Modi allegedly transferred funds abroad via letters of undertaking in the Punjab National Bank scam.
Issues:
Whether assets held overseas can be attached under PMLA.
How to determine “proceeds of crime” in a cross-border context.
Supreme Court Clarification:
Assets held abroad can be treated as “proceeds of crime” for attachment under PMLA through the equivalent value principle.
Indian authorities can attach assets within India that match the value of foreign tainted assets.
This includes indirect property or assets derived from the proceeds.
Implication:
Confirms PMLA’s extraterritorial reach in cases of international fraud and laundering.
4. Ketan Parekh vs Enforcement Directorate (Supreme Court, 2020)
Facts:
Ketan Parekh manipulated stock prices and transferred illicit gains through multiple shell companies abroad.
Issues:
Can Indian courts treat foreign transactions and holdings as proceeds of crime?
How to prove laundering across jurisdictions?
Supreme Court Clarification:
Laundering through multiple jurisdictions is recognized under PMLA.
Possession, concealment, or transfer of proceeds, even indirectly, amounts to an offence.
Tracing the money trail abroad is sufficient to bring it under PMLA if there is proof of derivation from the scheduled offence.
Implication:
Reinforces the principle that multi-jurisdiction schemes do not evade Indian law if linked to predicate offences in India.
5. Madhusudan Sharma vs Enforcement Directorate (Supreme Court, 2019)
Facts:
Sharma transferred large sums abroad after misappropriating funds from an Indian company. ED attempted to attach assets in India equivalent to foreign funds.
Issues:
Can Indian authorities attach assets in India when the proceeds of crime are abroad?
Is there a limit to equivalent value attachment?
Supreme Court Clarification:
PMLA allows attachment of assets in India that correspond in value to foreign tainted assets.
Indian courts must ensure attachment is proportionate and mathematically equivalent to the foreign proceeds.
Established principles for tracing funds and calculating equivalent value.
Implication:
Provides a clear framework for handling international laundering, ensuring proportionality and fairness.
6. Central Bureau of Investigation vs Sharad Shetty (Supreme Court, 2018)
Facts:
Shetty laundered money obtained from bribery and kickbacks in cross-border contracts.
Issues:
Whether indirect holding of illicit funds abroad constitutes laundering.
Role of intent and ongoing activity.
Supreme Court Clarification:
Money laundering is a continuing offence and includes indirect or intermediated holdings.
Holding abroad, using shell accounts, or transferring through third parties is captured under PMLA.
The mental element (knowledge that the property is tainted) is crucial.
Implication:
Clarifies that schemes using multiple foreign accounts or companies are covered under PMLA if there is knowledge of illegality.
Key Takeaways from These Cases
Cross-border proceeds can be treated as “proceeds of crime” in India using the equivalent-value principle.
Continuing offence doctrine allows enforcement even if predicate offences predate PMLA or occur abroad.
Intent and knowledge of the offender are critical in establishing liability.
Attachment in India must be proportional to the value of foreign assets.
Multi-jurisdiction laundering schemes are within the scope of PMLA if linked to scheduled offences.
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