The Supreme Court has reiterated that money laundering under the Prevention of Money Laundering Act (PMLA) is not a one-time offence but a continuous process. On March 17, 2025, the Court dismissed the appeal of former Gujarat IAS officer Pradeep Sharma, who sought to be discharged from a money laundering case.
Sharma had been accused of misusing his position as a Collector to generate illicit funds through bribery. He argued that the alleged predicate offences occurred before the enactment of PMLA, making the charges against him invalid. However, the Supreme Court upheld the Enforcement Directorate’s (ED) argument that money laundering is an ongoing offence, extending beyond the initial criminal act as long as illicit gains are concealed or used in any financial system.
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The Supreme Court, while referring to Vijay Madanlal Chaudhary vs. Union of India [(2023) 12 SCC 1], reinforced that the offence of money laundering is independent of the predicate offence. The bench, led by Justice Vikram Nath and Justice Prasanna B. Varale, made it clear that as long as proceeds of crime are hidden, used, or presented as legal property, the offence remains ongoing. The Court stated that the relevant date for determining a money laundering offence is not when the predicate offence was committed but when the accused engages in financial activities connected to the proceeds of crime. This ruling invalidates any argument against the retrospective application of PMLA.
The Enforcement Directorate initiated proceedings against Pradeep Sharma, alleging that he played a significant role in money laundering. The charges stemmed from two FIRs related to corruption and financial fraud. According to ED investigations, Sharma used multiple financial channels to conceal the origins of illicit funds. The agency further discovered evidence of offshore accounts and the integration of these funds into legitimate financial transactions.
The Supreme Court found that the material presented by ED demonstrated a strong link between Sharma and financial transactions involving tainted money. It concluded that the accused remained actively engaged in financial operations that sought to disguise the illicit nature of the funds long after the predicate offences were committed.The Supreme Court highlighted the serious economic consequences of money laundering, pointing out that illicit financial transactions distort the formal economy. It noted that such activities deprive the state of crucial revenue and create an unfair economic advantage for those involved in laundering proceeds of crime. The judgment emphasized that courts must adopt a strict approach when dealing with money laundering cases, ensuring that perpetrators cannot exploit procedural loopholes.
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The ruling reiterated that economic offences require a more stringent judicial approach than ordinary criminal cases. The Supreme Court observed that allowing financial criminals to escape legal consequences could encourage further economic misconduct, ultimately harming the nation’s economic stability.
This judgment strengthens the enforcement of PMLA by reinforcing that money laundering is not restricted to the initial crime but continues as long as illicit gains are retained, transferred, or disguised. It also settles any ambiguity regarding the retrospective application of PMLA, confirming that laundering activities, even if linked to predicate offences committed before PMLA’s enactment, fall under its jurisdiction. Additionally, the ruling sets a strong precedent, ensuring that future cases involving financial crimes are examined within a broader legal timeframe, preventing accused individuals from escaping liability through technicalities.
Case Title: PRADEEP NIRANKARNATH SHARMA VERSUS DIRECTORATE OF ENFORCEMENT & ANR.
