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

Ravi bought a flat in 2019 using funds he knew came from a fraud committed by his employer. He still lives in the flat and benefits from it. His counsel argues that the offence ended when the flat was bought. Under the Explanation to Section 3 of the PMLA, 2002, how should the forensic auditor treat this argument?

The argument fails because the Explanation to Section 3 treats money-laundering as a continuing activity. It continues until the person stops directly or indirectly enjoying the proceeds through concealment, possession, acquisition, use, or projecting it as untainted, so Ravi's ongoing enjoyment keeps the offence alive.

  1. AReject it, because the activity is continuing until the person stops directly or indirectly enjoying the proceedsCorrect
  2. BAccept it, because acquisition is a one-time act
  3. CAccept it, because possession is not an offence
  4. DReject it, because only attempts are covered by the Explanation

Explanation

The Explanation states that the process or activity connected with proceeds of crime is a continuing activity that continues until a person is directly or indirectly enjoying the proceeds by concealment, possession, acquisition, use, or projecting or claiming it as untainted. Ravi still enjoys the flat, so the activity continues.

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