Reasonableness Test for Attaching Non-Proceeds of Crime: Limits on Attaching Pre-existing Property under PMLA

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.... TMI 1392 - KERALA HIGH COURT INTRODUCTION This article analyzes a recent High Court judgment that examined the scope of the Prevention of Money Laundering Act (PMLA) concerning the provisional attachment of properties not directly derived from the alleged proceeds of crime. The core legal question was whether authorities can attach properties acquired before the commission of the scheduled offe....

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....h Courts and the Supreme Court on the interpretation of "proceeds of crime." The court found that the properties that can be attached must be those acquired by utilizing the proceeds of crime. Attaching properties unconnected to the alleged criminal activity would violate the principles of fairness and reasonableness. The purpose of the PMLA is to remove tainted money, not to proceed ag....

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....court established that properties acquired before the commission of the scheduled offence cannot be attached unless they fall under the third limb of Section 2(1)(u), i.e., equivalent value property held within India when the original proceeds are taken or held outside the country. DOCTRINAL ANALYSIS The judgment clarified the legal principles governing the attachment of properties under the PML....