Prevention of Money Laundering Act, 2002
Scheduled or Predicate Offences under the PMLA
Money laundering needs money, and the PMLA insists that it be money from a particular kind of crime: a scheduled offence, often called the predicate offence. The Schedule to the Act lists these offences in three Parts, drawn from the general penal law and dozens of special statutes. Whether a PMLA case can begin, continue or survive depends on the status of the predicate offence. The Supreme Court has settled the principles, most clearly in Vijay Madanlal Choudhary (2022) and Pavana Dibbur (2023). This note covers the Schedule, the relationship between the two offences, and those principles.
The three Parts of the Schedule, the predicate offence as a switch, and the principles in Pavana Dibbur
1. Meaning
§ Scheduled offence and predicate offence Scheduled offence, s. 2(1)(y): the offences specified in Part A of the Schedule; the offences specified in Part B if the total value involved is one crore rupees or more; and the offences specified in Part C. Predicate offence is the term used in international usage and in practice for the underlying crime that generates the proceeds. Under the PMLA, a predicate offence must be a scheduled offence. Scheduled offence and money laundering are distinct offences. The scheduled offence produces the proceeds; money laundering is the separate offence of dealing with them. |
2. The Three Parts of the Schedule
Part | Contents | Threshold |
|---|---|---|
Part A | Offences under the Penal Code, now read as references to the BNS, including criminal conspiracy, cheating, forgery, counterfeiting, extortion, robbery and dacoity, trafficking in persons and murder; and offences under many special laws, including the NDPS Act, the Prevention of Corruption Act, the UAPA, the Explosive Substances Act, the Arms Act, the Wild Life (Protection) Act, the Immoral Traffic (Prevention) Act, the SEBI Act, the Customs Act (s. 135), the Companies Act (s. 447, fraud), intellectual property, IT, environmental and other statutes | None: any amount |
Part B | The offence of false declaration under s. 132 of the Customs Act | Only if the total value involved is one crore rupees or more |
Part C | Offences of cross-border implications: conduct abroad that would be an offence in Part A or B, with proceeds transferred to India; or a Part A or B offence in India with proceeds transferred abroad; and certain other offences | None |
§ References to the Penal Code after 2024 The Schedule names Penal Code sections. After the Bharatiya Nyaya Sanhita replaced the Penal Code on 1 July 2024, those references are read as references to the corresponding BNS provisions, by Section 8 of the General Clauses Act, 1897. Check the current Schedule. The Schedule has been amended many times, and the precise list should always be verified against the current text before an entry is relied on in an answer. |
3. Scheduled Offences by Subject
Subject | The scheduled offence and its PMLA relevance |
|---|---|
Criminal conspiracy | A scheduled offence only if the conspiracy is to commit an offence itself in the Schedule: Pavana Dibbur (2023) |
Cheating | Cheating and dishonestly inducing delivery of property is scheduled; the most common predicate in fraud cases |
Forgery | Forgery of valuable security and using forged documents are scheduled |
Corruption | Offences under the Prevention of Corruption Act are scheduled; bribes are classic proceeds |
NDPS | Drug offences are scheduled; laundering of NDPS proceeds carries up to ten years under the proviso to s. 4 |
Organised crime | Its constituent offences, such as extortion, robbery, trafficking and narcotics, are scheduled; the proceeds of organised criminal activity are reached through them |
Terrorism | UAPA offences, including raising funds for terrorism, are scheduled |
Companies Act fraud | Fraud under s. 447 of the Companies Act, 2013 is scheduled |
Customs | s. 135 (evasion) in Part A; s. 132 (false declaration) in Part B above one crore rupees |
Wildlife | Offences under the Wild Life (Protection) Act, such as hunting and illegal trade in wildlife, are scheduled |
Human trafficking | Trafficking in persons, and offences under the Immoral Traffic (Prevention) Act, are scheduled |
Arms and explosives | Offences under the Arms Act, the Explosive Substances Act and the Explosives Act are scheduled |
4. The Relationship between the Predicate Offence and the PMLA Offence
§ Dependent, but distinct • Dependent. There can be no proceeds of crime, and so no money laundering, without a scheduled offence. • Distinct. Money laundering is a separate offence, tried by the Special Court, and punished separately. The Explanation to Section 44 makes clear that the trial of the laundering offence is not dependent on the outcome of the trial of the scheduled offence, save for the principles below. • The PMLA accused need not be accused in the predicate case. A person who knowingly assists in dealing with proceeds may be prosecuted under Section 3 though he had no part in the scheduled offence. • Existence is required. The ED cannot proceed on the assumption that a scheduled offence has been committed; it must be registered with the jurisdictional police or pending before a competent forum. |
5. Quashing, Discharge and Acquittal in the Scheduled Offence
📖 Vijay Madanlal Choudhary v. Union of India, 2022 SCC OnLine SC 929 The Supreme Court held that the offence of money laundering is dependent on the illegal gain of property as a result of criminal activity relating to a scheduled offence. If the person is finally discharged or acquitted of the scheduled offence, or the criminal case against him is quashed by a competent court, there can be no offence of money laundering against him or any person claiming such property through him. |
📖 Parvathi Kollur v. State by Directorate of Enforcement, Supreme Court, 2022 Applying Vijay Madanlal Choudhary, the Supreme Court declined to interfere where the accused had been acquitted in the scheduled offence and the PMLA proceedings had consequently been set aside, holding that no action under the PMLA could be sustained once the scheduled offence had ended in acquittal. |
📖 Pavana Dibbur v. Directorate of Enforcement, 2023 INSC 1029; [2023] 13 SCR 1049; decided 29 November 2023 Conspiracy. An offence under Section 120B of the Penal Code, included in the Schedule, becomes a scheduled offence only if the conspiracy alleged is to commit an offence which is itself in the Schedule. It is not the legislative intent to make every non-scheduled offence a scheduled offence by adding a charge of conspiracy. The PMLA accused. It is not necessary that a person against whom the offence under Section 3 is alleged must have been an accused in the scheduled offence. Timing. The offence under Section 3 can be committed after the scheduled offence is committed. The benefit of the predicate outcome. Even a PMLA accused who is not an accused in the scheduled offence will benefit from the acquittal or discharge of all the accused in the scheduled offence, or the quashing of those proceedings. Subsequent history. A Bench of Justices Abhay S. Oka and Pankaj Mithal decided the case; review petitions by the ED were dismissed in 2024, and the principle was applied in the proceedings concerning D. K. Shivakumar the same year. |
6. Can a PMLA Case Survive without a Scheduled Offence?
§ The short answer is no At the start, the ED cannot register or pursue a case unless a scheduled offence is registered or pending. During the case, if the scheduled offence is quashed, or all accused are finally discharged or acquitted, the PMLA case falls. The narrow qualification is that the laundering offence is tried independently, and the PMLA case continues so long as the scheduled offence subsists, whatever the stage of its investigation or trial. Closure reports. Where the police file a closure report in the scheduled offence and it is accepted by the competent court, the same consequence follows as on discharge. |
7. Frequently Asked Questions
What is a scheduled offence?
An offence in Part A of the Schedule; an offence in Part B if the value involved is one crore rupees or more; or an offence in Part C, under Section 2(1)(y).
Is criminal conspiracy alone enough for a PMLA case?
No. Pavana Dibbur held that Section 120B is a scheduled offence only if the conspiracy is to commit an offence that is itself in the Schedule.
Must the PMLA accused be an accused in the predicate offence?
No. A person who knowingly deals with proceeds of crime may be prosecuted under Section 3 without being an accused in the scheduled offence.
What happens to the PMLA case if the predicate offence is quashed?
It cannot continue. Vijay Madanlal Choudhary held that there can be no money laundering where the scheduled offence is quashed or the accused is finally discharged or acquitted.