Definition
Concealment of illicit funds.
Process of making illegally obtained money appear legitimate.
Statutory Definition
PMLA 2002.
Etymology & Origin
Originates from the mafia era of the 1920s in the US, where cash from illegal activities was funneled through 'laundromats' to make it look clean and legitimate.
Full Legal Analysis
Money Laundering is the criminal process of disguising the origins of illegally obtained money (proceeds of crime), typically by passing it through a complex sequence of banking transfers or commercial transactions, so that it appears to have come from a legitimate source.
In India, this is governed strictly by the Prevention of Money Laundering Act, 2002 (PMLA). The law does not just punish the final act of hiding the money; it criminalizes any involvement—direct or indirect—in any process or activity connected with the proceeds of crime, including its concealment, possession, acquisition, or use.
A crucial aspect of Indian money laundering law is that it requires a 'predicate offence' (a Scheduled Offence) to exist. If there is no scheduled offence generating 'proceeds of crime', there can be no money laundering. However, the burden of proof under PMLA is reversed; the accused must prove the funds are untainted.
The Supreme Court upheld the constitutionality of the PMLA, including the reverse burden of proof and the stringent 'twin conditions' for bail under Section 45, making it exceptionally difficult to secure bail in ED cases.
For defence advocates, securing bail in a PMLA case requires satisfying the court that there are reasonable grounds to believe the accused is not guilty, a significantly higher threshold than regular criminal law.
This Term in Indian Statutes
Prevention of Money Laundering Act, 2002, 2002
"Offence of money-laundering defined as any involvement with the proceeds of crime."
The primary charging section establishing criminal liability for laundering.
