The Proceeds of Crime (Amendment) Act 2022 indicates important legal clarifications and enforcements under India’s Prevention of Money Laundering Act (PMLA) 2002, related to the definition, attachment, and confiscation of property acquired through criminal activities. The 2022 amendment is not a standalone act, but it still plays a critical role to strengthen India’s anti-money laundering (AML) scheme and the Supreme Court ruling in Vijay Madanlal Choudhary v. Union of India shapes its interpretation.
What Is “Proceeds of Crime” Under the 2022 Amendment?
This amendment has clarified that:
- Proceeds of Crime (POC) indicate assets that may be originated from criminal activities and it include not just the original property gained through illegal means, but also any value derived, obtained indirectly, or accumulated through integration or conversion of assets into different forms to ensure that all benefits from illegal activities are covered.
- Any property that is located outside India can be identified as a crime proceed and may be attached or confiscated under the Prevention of Money Laundering Act (PMLA) regulations no matter where the property is.
- It is enough having "possession" of POC to trigger enforcement actions as in the absence of a conviction, authorities can still act if the criminal suspect is unable to provide an explanation or justification for the source of illegally obtained assets.
Key Highlights of the 2022 Supreme Court Ruling on PMLA & POCA
The 2022 ruling reinforce major measures taken by the Prevention of Money Laundering Act (PMLA), especially the constitutional validity of its enforcement mechanisms to combat money laundering and ensure that authorities have all the necessary tools to investigate and prosecute financial crimes.
| Provision | Supreme Court Position |
| Attachment of Property | Valid even at the pre-trial stage if linked to proceeds of crime |
| Reverse Burden of Proof | Upheld; accused must prove assets are not tainted |
| Enforcement Directorate (ED) powers | Recognized as investigative, not police powers—no FIR needed |
| Definition of POC | Broadened to include indirect gains and third-party holdings |
Why Is POCA 2022 Significant for AML Compliance?
- It enables aggressive asset attachment as early as the investigation stage to secure critical assets and prevent their misuse.
- POCA 22 facilitates cross-border cooperation for the seizure of foreign assets to enable authorities track and recover illegally acquired wealth in other jurisdictions.
- It aligns with FATF Recommendation 4 on important agenda like the confiscation of criminal proceeds, strengthening compliance efforts with international standards and combating money laundering activities.
- It empowers the EDT for acting independently from regular police proceedings and grant it greater authority and flexibility to monitor financial crime cases effectively.
Enforcement Snapshot (India – 2022–2024)
2022-2024 period points to a critical phase in India’s enforcement framework under POCA 2022 with Enforcement Directorate (ED) granted expanded powers and a major increase in activities that prevent money laundering and financial crimes. The following snapchat emphasizes the important enforcement achievements, trends and their impact on India’s fight against financial crimes.
| Metric | Value |
| Properties attached under PMLA | ₹19,111 crore (~$2.3B) |
| Ongoing POC-linked investigations | 1,700+ |
| Convictions under PMLA | 36 (as of 2024) |
| Total ED actions involving POC | 4,800+ |
Who Is Affected by POCA Amendments?
- Politically Exposed Persons (PEPs) including people who hold positions of power or may be involved in high-risk activities.
- Business owners who operate on real estate, gaming, cryptocurrency and export/ important industries, where financial activities require much closer scrutiny.
- Banking & NBFCs that are linked to fraudulent activities or any suspicious transactions that may indicate vulnerabilities within financial organizations.
- Third parties holding Proceeds of Crime (POC) who may potentially expose themselves to legal or financial risks without knowing.
Compliance Implications for Institutions
Companies in the regulated sectors must have:
- Strong source of funds documentation by ensuring that all transactions are backed with verifiable records to maintain transparency.
- Enhanced beneficial ownership checks for identifying and verifying the actual people behind corporate structures and their accounts.
- Reported transactions that may be linked to layered or laundered property to prevent illegal financial practices and make sure that suspicious activities are flagged and monitored.
- Full cooperation with ED investigations under Section 50 of PMLA with all necessary information and documentation to support the ongoing inspection.
FAQ's Blog Post
It is legislation aimed at preventing and controlling money laundering and dealing with assets derived from criminal activities. It strengthens enforcement powers and compliance obligations for regulated entities.
The Enforcement Directorate (ED) is the primary authority for investigating and prosecuting offences under POCA 2022. It works alongside other regulators like the Financial Intelligence Unit (FIU-IND).
They refer to any property or assets obtained directly or indirectly from criminal activity. This includes money, goods, or property converted from illegal earnings.
It works in alignment with the PMLA, expanding definitions and strengthening enforcement for proceeds-of-crime offences. Both laws share investigative and prosecutorial mechanisms.
Banks, financial institutions, designated non-financial businesses, and professions such as real estate agents and lawyers. Compliance also applies to certain cryptocurrency service providers.
Penalties include heavy fines, asset confiscation, and imprisonment for responsible persons. Repeat violations can lead to harsher sentencing.
Yes, it explicitly brings virtual digital assets under its scope for anti-money laundering controls. VASPs must perform KYC and report suspicious transactions.
Entities must file Suspicious Transaction Reports (STRs) and maintain records of clients and transactions for a specified period. Timely reporting is mandatory to avoid liability.
