PMLA liability needs nexus with proceeds of crime; mere assistance in predicate transactions was insufficient and proceedings were quashed.

Under the Prevention of Money Laundering Act, liability requires a prima facie nexus with proceeds of crime through direct or indirect involvement in the process or activity connected with them. On the materials, the applicant was alleged only to have assisted in the underlying banking transactions and failed to report excesses in monthly returns; there was no allegation of possession, acquisition, use, concealment, or other post-generation dealing with proceeds of crime. The Court held that these facts did not disclose the essential ingredients of the PMLA offence against him, and the proceedings were quashed.

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Issues: Whether proceedings under the Prevention of Money Laundering Act could be quashed where the allegation against the applicant was only of assisting in generation of proceeds of crime, without any allegation of possession, acquisition, use, concealment, or post-generation dealing with proceeds of crime.

Analysis: Section 3 of the Prevention of Money Laundering Act treats money laundering as an offence involving direct or indirect attempt, knowing assistance, or involvement in any process or activity connected with proceeds of crime. The definition of proceeds of crime in Section 2(1)(u) and the authoritative interpretation of Section 3 establish that liability arises from involvement in the process or activity connected with such proceeds, but the factual foundation must still show a prima facie nexus between the accused and the proceeds of crime. The materials before the Court did not attribute to the applicant any possession, acquisition, use, concealment, or other post-generation handling of proceeds of crime. The allegation was confined to his role in the underlying banking transactions and in not reporting excesses in monthly returns. On those facts, the case did not disclose the essential ingredients of the PMLA offence against him.

Conclusion: The proceedings under the Prevention of Money Laundering Act against the applicant were held not to make out a prima facie offence and were quashed.

Ratio Decidendi: Mere participation in the predicate transactions or assistance in generation of illicit funds, any allegation of possession, acquisition, use, concealment, or other dealing with proceeds of crime, does not by itself constitute the offence of money laundering under Section 3 of the Prevention of Money Laundering Act, 2002.

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