PMLA'S Retrospective Application: Navigating Legal Complexities

Nakashvir Singh Aulakh, Independent Legal Practitioner - Chandigarh | NLU Punjab (RGNUL), Class of 2023

I. Introduction

Retrospectivity or retrospective application of any rule or law is notoriously known for violating the rule of law. Rule of law is a social norm which the citizens are expected to follow in a well- functioning society. Retrospective application results in future consequences of past actions and has a bad reputation for being violative of these social norms. Charles Stampford in his book ‘Retrospectivity and the Rule of Law’1 argues that retrospectivity as a concept fit neatly into modern legal systems and that it should not be seen as something that runs contrary to the Rule of Law. However, there was a little discussion on retrospective criminal laws in the book.

Retrospective application becomes even trickier when an offence such as that of money laundering is in question. Penalties for such offences apply only pursuant to the commission of a predicate offence, which is an offence which creates the proceeds to be laundered. The Prevention of Money Laundering Act, 20022 (“PMLA”) in India has a schedule of offences in the act, and the offence of money laundering is made out only when the predicate offence is from the schedule. Additionally, according to the revised definition of money laundering,3 the offense persists as long as the individual benefits from the tainted property that is derived from the predicate offence. This has sparked a debate on retrospectivity of the offenses added to the PMLA schedule. Adding an offense to the schedule of offences in PMLA implies that the person is now on the wrong side of the law since they are currently enjoying the proceeds, therefore, prosecution becomes plausible.