Scheduled Offences under the PMLA 2002
The legal framework for combating money laundering in India is built upon the identification and prosecution of specific criminal activities known as "scheduled offences". Under the Prevention of Money Laundering Act (PMLA), 2002, a money laundering investigation cannot be initiated unless a primary crime—the scheduled offence—has been committed and has resulted in the generation of "proceeds of crime".
4.1 The Concept of Offence and its Role in Money Laundering
In general legal terms, an offence is defined as a crime or an illegal action. However, within the specific context of the PMLA, the term "scheduled offence" has a technical definition found in Section 2(1)(y) of the Act. These offences are explicitly listed in Parts A, B, and C of the Schedule to the PMLA 2002.
The commission of a scheduled offence is the essential foundation for a money laundering charge. The process typically follows this sequence:
- A person commits a crime listed in the Schedule (the scheduled or "predicate" offence).
- This criminal activity generates property or assets (proceeds of crime).
- The person then attempts to hide the illegal origin of these proceeds, which constitutes the offence of money laundering.
Without the generation of proceeds from a scheduled offence, there can be no prosecution under the PMLA.
4.2 Categorisation of Scheduled Offences
The PMLA divides scheduled offences into three distinct parts, each with different scopes and requirements regarding monetary thresholds.
4.2.1 Part A: Exhaustive Criminal List (No Monetary Threshold)
Part A contains a comprehensive list of serious crimes drawn from various Indian legislations. Notably, there is no minimum monetary threshold for offences in Part A; the PMLA applies regardless of the value involved in the crime.
Major legislations covered under Part A include:
- Bharatiya Nyaya Sanhita (BNS) 2023 (formerly the Indian Penal Code, 1860).
- Unlawful Activities (Prevention) Act, 1967 (UAPA).
- Narcotic Drugs and Psychotropic Substances (NDPS) Act, 1985.
- Prevention of Corruption Act, 1988.
- Securities and Exchange Board of India (SEBI) Act, 1992.
- Information Technology Act, 2000.
- Companies Act, 2013 (specifically relating to punishment for fraud).
4.2.2 Part B: Offences with Monetary Thresholds
Part B encompasses offences where a specific value must be involved for the PMLA to be invoked. Currently, this part includes offences under the Customs Act, 1962. For these crimes to be considered scheduled offences under Part B, the total value involved must be one crore rupees or more.
4.2.3 Part C: Cross-Border and Specific Tax Implications
Part C deals with offences that have cross-border implications. This includes any offence listed in Part A that is committed across borders. Additionally, it covers specific offences against property under the BNS/IPC and wilful attempts to evade tax or interest under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015. Like Part A, offences in Part C do not carry a specific monetary threshold.
4.3 Detailed Breakdown of Major Scheduled Offences
The following table summarises key paragraphs of Part A as listed in the Workbook:
| Paragraph | Primary Legislation | Nature of Offences Covered |
|---|---|---|
| 1 | BNS 2023 / IPC 1860 | Murder, kidnapping for ransom, extortion, robbery, dacoity, cheating, forgery, and counterfeiting currency. |
| 2 | NDPS Act, 1985 | Illegal import/export of drugs, financing illicit traffic, and contraventions related to cannabis or opium. |
| 4 | UAPA, 1967 | Terrorist acts, raising funds for terrorism, and membership in terrorist organisations. |
| 5 | Arms Act, 1959 | Illegal manufacture, sale, or possession of prohibited arms and ammunition. |
| 8 | Prevention of Corruption Act | Public servants taking gratification, criminal misconduct, and abetment of corruption. |
| 11 | SEBI Act, 1992 | Insider trading, market manipulation, and deceptive devices in the securities market. |
| 22 | IT Act, 2000 | Breach of confidentiality and privacy; offences committed outside India. |
Summary of Other Specific Acts Included in Part A:
- Wildlife Protection Act, 1972: Hunting wild animals or illegal trade in animal articles.
- Antiquities and Art Treasures Act, 1972: Illegal export of antiquities.
- Child Labour (Prohibition and Regulation) Act, 1986: Illegal employment of children.
- Transplantation of Human Organs Act, 1994: Commercial dealings in human organs.
- Copyright & Trade Marks Acts: Infringement of intellectual property and use of false trademarks.
- Environmental Protection Acts: Discharging pollutants and failure to comply with industrial plant regulations.
4.4 Key Takeaways for Professionals
- Foundation Principle: The PMLA cannot stand alone; it requires a "predicate" scheduled offence to have occurred first.
- Proceeds of Crime: The scheduled offence must generate some form of asset or property for money laundering provisions to apply.
- No Threshold for Part A: Serious crimes like murder, terrorism (UAPA), and drug trafficking (NDPS) are covered by PMLA regardless of the amount of money involved.
- Broad Scope: The list of scheduled offences is exhaustive and covers a wide range of crimes from environmental pollution to insider trading.
- Cross-Border Focus: Part C ensures that international financial crimes and specific tax evasions under the Black Money Act are captured within the PMLA's reach.
Important Terms to Remember
- Predicate Offence: The underlying scheduled crime that generates the proceeds of crime.
- Section 2(1)(y): The specific section of the PMLA that defines "scheduled offence".
- Part B Threshold: The one crore rupee requirement specific to certain offences like those in the Customs Act.
- Cross-Border Implications: Crimes where proceeds are transferred out of India or brought into India from abroad.