Proceedings under the Prevention of Corruption Act and under the Money Laundering Legislation

A substantial corruption case today produces two prosecutions. The first is under this Act and concerns the taking of the advantage or the acquisition of the wealth. The second is under the Prevention of Money-Laundering Act, 2002 and concerns what was done with the proceeds. Offences under this Act are scheduled offences for that purpose, so the second proceeding is built on the first, and yet it is independent of it in forum, in procedure and in the conditions of bail.

1. The Comparison

Basis	Prevention of Corruption Act	Money laundering legislation
What is punished	Demanding or accepting an undue advantage; misappropriation; unexplained wealth	Dealing with the proceeds of a scheduled offence, including concealment, possession, acquisition, use and projecting them as untainted
The predicate	None; the offence stands alone	A scheduled offence, of which the offences under this Act are among the principal ones
Who investigates	The Central Bureau of Investigation, State anti-corruption bureaux, Lokayukta police	The Directorate of Enforcement
Who is prosecuted	The public servant, the giver, the middleman, the abettor	Anyone who dealt with the proceeds, including relatives and associates who held or used them
The forum	The special judge under this Act	The special court designated under the money laundering statute, which is ordinarily the same court
Attachment	Under Section 18A, applying the Ordinance of 1944	Provisional attachment by the Directorate, confirmed by the adjudicating authority, followed by confiscation on conviction
Bail	The ordinary law; no special conditions	The twin conditions in that statute, which require the court to be satisfied that there are reasonable grounds for believing the accused is not guilty and is unlikely to offend while on bail
Screens	Sanction under Section 19, and approval under Section 17A where applicable	No corresponding requirement, the offence being one against the general law rather than one committed in office

2. How the Second Proceeding Is Built on the First

The predicate offence. A prosecution for money laundering requires a scheduled offence to have been committed, and the registration of a case under this Act is what supplies it.
The proceeds of crime. The property derived or obtained, directly or indirectly, as a result of that offence, together with the value of such property, is what the second statute pursues. The definition is wider than the property identified in the corruption case, and extends to property of equivalent value where the original property cannot be traced.
Independence in operation. The money laundering proceeding does not await the outcome of the corruption trial, and attachment is effected long before any conviction.
Dependence in the result. If the accused is finally acquitted or discharged in the predicate case, the foundation of the money laundering prosecution goes with it, because without a scheduled offence there can be no proceeds of crime.

⚠ The practical consequence for an accused

The second proceeding is usually the more onerous, for three reasons. The bail conditions are far stricter than under this Act, where the ordinary law applies. The attachment machinery operates at once and reaches property in the hands of family members. And the investigation is conducted by an agency with its own powers of summons and recording of statements, which operate differently from a police investigation. Advice given on a corruption case that ignores the money laundering exposure is incomplete, and the sequence in which the two are resisted usually matters more than the merits of either taken alone.

3. Where They Overlap and Where They Do Not

The same property may be attached twice, under Section 18A and under the money laundering statute, and the second is the route ordinarily used because it is administered by a dedicated agency and reaches property of equivalent value.
The persons differ. A relative who holds property for the public servant may not be guilty of any offence under this Act, but may be within the money laundering offence if he dealt with the proceeds knowing their origin.
The corruption case may succeed where the second fails, if the advantage was consumed rather than invested, so that no proceeds survive.
The benami legislation runs alongside both, reaching property held in another's name irrespective of any prosecution.

4. Related Topics and Provisions

Topic or provision	Connection
Attachment and Forfeiture: Section 18A	The two attachment machineries
Disproportionate Assets: A Complete Note	The financial material common to both proceedings
Miscellaneous Provisions and the Statutory Setting	Section 28 and the parallel statutes
Sections 13, 18, 18A and 28, Prevention of Corruption Act, 1988	The provisions engaged
Prevention of Money-Laundering Act, 2002	The second proceeding