Prevention of Money Laundering Act, 2002
Presumptions under the PMLA: Sections 22 to 24
Money laundering is proved largely through documents and transactions, and much of the relevant knowledge lies with the accused. The PMLA therefore contains three presumptions. Section 22 presumes that records found in search or survey belong to the person, are true, and bear genuine signatures. Section 23 presumes that a chain of interconnected transactions is tainted when one link is proved. Section 24, the most important, reverses the burden of proof on whether proceeds of crime are involved in money laundering. None of them operates in a vacuum: each requires a foundation to be laid first. This note explains all three.
The three presumptions resting on the foundational facts, with Section 24 and the presumption of innocence
1. Presumption as to Records or Property: Section 22
§ Section 22, in substance Where any records or property are found in the possession or control of any person in the course of a survey or search, it shall be presumed, in proceedings under the Act, that: (i) such records or property belong to that person; (ii) the contents of the records are true; and (iii) the signature and every other part of the records which purport to be in the handwriting of a particular person, or may reasonably be assumed to have been signed by or in the handwriting of that person, are in that person's handwriting, and where records are stamped, executed or attested, they were executed or attested by the person by whom they purport to have been. Records from abroad. Records received from a place outside India, duly authenticated in the prescribed manner, are likewise presumed genuine as to signature and handwriting, and may be admitted even if not duly stamped. |
§ Operation • Rebuttable. The person may show that the records belonged to another, or that their contents are false, or that a signature is forged. • Purpose. It spares the prosecution the formal proof of documents found in the accused's own possession, where proof would otherwise be difficult. |
2. Presumption in Interconnected Transactions: Section 23
§ Section 23, in substance Where money laundering involves two or more interconnected transactions, and one or more of them is proved to be involved in money laundering, then for the purposes of adjudication or confiscation under Section 8 or the trial of the offence, it shall, unless otherwise proved to the satisfaction of the Adjudicating Authority or the Special Court, be presumed that the remaining transactions form part of such interconnected transactions. Why it matters. Layering breaks one flow of money into many transactions. Section 23 means the prosecution need not prove each link separately once the chain and one tainted link are shown. What must be shown first. That the transactions are genuinely interconnected, and that at least one is proved to be involved in laundering. |
3. Burden of Proof: Section 24
§ Section 24, in substance In any proceeding relating to proceeds of crime under the Act: (a) in the case of a person charged with money laundering under Section 3, the Authority or Court shall, unless the contrary is proved, presume that such proceeds of crime are involved in money laundering; and (b) in the case of any other person, the Authority or Court may presume that such proceeds of crime are involved in money laundering. |
Aspect | The position |
|---|---|
Person charged | Mandatory presumption: 'shall presume', rebuttable by the person |
Any other person | Discretionary presumption: 'may presume', as in attachment of third-party property |
Scope | Any proceeding relating to proceeds of crime: attachment, adjudication, confiscation and trial |
What is presumed | That the proceeds of crime are involved in money laundering |
What is NOT presumed | The scheduled offence, or that the property is proceeds of crime at all; these must be established first |
4. Foundational Facts before the Reverse Burden
📖 Vijay Madanlal Choudhary v. Union of India, 2022 SCC OnLine SC 929 The Supreme Court upheld Section 24, holding that it has a reasonable nexus with the object of the Act, but that the burden is not absolute. It is triggered only after the prosecution establishes the foundational facts: (i) criminal activity relating to a scheduled offence; (ii) property derived or obtained from that activity; and (iii) the involvement of the person in a process or activity connected with that property. Only then is the person required to rebut the presumption that the proceeds are involved in money laundering. |
5. Section 24 and the Presumption of Innocence
§ Displaced, not abolished • Innocence remains the starting point. The prosecution must prove the foundational facts beyond reasonable doubt before any shift of burden. • A limited shift. The presumption relates only to whether the proceeds are involved in laundering; it does not presume the predicate offence or the proceeds. • Consistent with principle. The Supreme Court has upheld reverse burdens in special statutes where the foundation is laid first and the rebuttal is fair, as in Noor Aga v. State of Punjab, (2008) 16 SCC 417. • Justification. The facts about the source and handling of property lie peculiarly within the knowledge of the person holding it. |
6. The Standard for Rebutting the Presumption
§ Preponderance of probabilities The standard. The person rebuts the presumption by showing, on a preponderance of probabilities, that the property is not involved in money laundering; proof beyond reasonable doubt is not required. The means. Evidence of a lawful source: income tax returns, bank records, business accounts, that the property was acquired before the crime, or that the link to the scheduled offence is absent. The person may also rely on gaps in the prosecution's own material. The effect. Once rebutted, the presumption ceases to operate, and the prosecution must prove its case on the whole evidence. |
7. Frequently Asked Questions
What does Section 22 presume?
That records or property found in search or survey belong to the person, that the records' contents are true, and that signatures and handwriting are genuine, unless rebutted.
What does Section 23 presume?
That where one of several interconnected transactions is proved to be involved in laundering, the remaining transactions form part of the same chain, unless otherwise proved.
Does Section 24 presume the scheduled offence?
No. The prosecution must first establish the scheduled offence, the proceeds, and the person's involvement; only then is it presumed that the proceeds are involved in laundering.
What is the standard for rebutting Section 24?
A preponderance of probabilities.