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CS Professional · Internal and Forensic Audit · Forensic Audit: Laws and Regulations

During a forensic review at Sharma Traders Pvt Ltd, an auditor finds that the managing director deposited cash obtained from a bribery scheme into a shell firm's account and then showed it as consultancy income. Under the Prevention of Money-Laundering Act, 2002, which feature of this conduct makes it fall within the offence of money-laundering?

Showing bribe money as consultancy income is projecting proceeds of crime as untainted property. Section 3 of the PMLA, 2002 makes any process or activity connected with proceeds of crime, including such projection, the offence of money-laundering.

  1. AProjecting proceeds of crime as untainted propertyCorrect
  2. BMerely declaring the income late to the tax department
  3. CPaying a vendor invoice in cash
  4. DFailing to hold a board meeting on time

Explanation

Section 3 covers any process or activity connected with proceeds of crime, including concealment, possession, acquisition, use, and projecting or claiming it as untainted property. Showing bribe money as consultancy income is projecting tainted money as legitimate. The other options are not linked to proceeds of crime.

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