Scheduled Offences

A river cannot be polluted if there is no river. Money laundering cannot be prosecuted if no scheduled offence generated the money.

In order to proceed against a person under the PMLA, a scheduled offence, as defined under section 2(1)(y) and mentioned in Parts A, B and C of the Schedule of the PMLA 2002 should have been committed and the proceeds of crime should have been generated.

Two conditions, both required. A scheduled offence alone is not enough — it must have produced proceeds. And proceeds alone are not enough — they must come from an offence in the Schedule.

Why the workbook calls it foundational: a critical element, for an offence to be termed as a money laundering offence is the commission of a scheduled offence, as it serves as the foundation for generating proceeds of crime.

And again: the offence of money laundering arises from criminal activity committed by a person in relation to scheduled offences.

This is why the definition of proceeds of crime is framed as it is. From Chapter 2: any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence.

Note how the explanation widens it — proceeds include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence.

"Relatable to" stretches further than "from".

It also explains why two investigations run at once. Depending on the scheduled offence, agencies like IFSCA, SEBI, CBI, customs, and police may be involved for parallel investigation of predicate (scheduled) offences, while the Directorate of Enforcement pursues the laundering.

And it explains a limit on the money laundering offence. A large unexplained sum is suspicious, and must be reported as such — but a Suspicious Transaction Report is not a prosecution. Prosecution needs the predicate offence identified.

The Schedule reaches wide precisely so that few profitable crimes fall outside it — twenty-nine paragraphs in Part A, from murder to trademark infringement.

A road keeps its route when the street sign changes. The offences in paragraph 1 are the same; only their numbers have moved.

Offences Under the Indian Penal Code (45 of 1860) and under Bharatiya Nyaya Sanhita (BNS) 2023 (45 of 2023) — and Part A lists both columns, precisely because a reader may know the offence by either number.

The renumberings most likely to matter to a financial intermediary:

Cheating and dishonestly inducing delivery of property — IPC 420 becomes BNS 318(4). The most famous number in Indian criminal law now has a different one.

Forgery of a valuable security, will, etc. — IPC 467 becomes BNS 338.

Using as genuine a forged document or electronic record — IPC 471 becomes BNS 340(2).

Criminal conspiracy — IPC 120B becomes BNS 61(2).

Counterfeiting currency notes or bank notes — IPC 489A becomes BNS 178, and using as genuine, forged or counterfeit currency notes or bank notes — IPC 489B becomes BNS 179.

Note that BNS 178 and 179 do double duty — they also cover the government stamp offences formerly at IPC 255 and 258.

Groups of sections collapse into fewer. Offences relating to extortion, formerly IPC 384 to 389, are now a single BNS 308; offences relating to robbery and dacoity, formerly IPC 392 to 402, become BNS 310 - 313; and the stolen property offences of IPC 411 to 414 become sub-sections of BNS 317.

Murder moves from IPC 302 to BNS 103(1); attempt to murder from 307 to 109.

What has not changed is the Part. The fourth sample question asks which Part covers BNS offences, and the answer is Part A of the Schedule — where no monetary threshold has been provided.

For an examination, learn the pairs rather than either column alone. A question may give the IPC number and ask for the BNS one, or describe the offence and ask for either.

And note that the cheating offences run across four entries — 417 → 318(2), 418 → 318(3), 419 → 319(2) and 420 → 318(4) — so the BNS gathers cheating into sections 318 and 319.

Three doors lead into the same room, but only one has a height bar across it.

Part A — an exhaustive list of scheduled offences drawn from various criminal legislations in India, for which no monetary threshold has been provided.

Part B — offences under Indian tax laws, such as the Customs Act 1962, for which a monetary threshold of 3 million rupees or 10 million rupees has been prescribed as may be applicable.

Part C — any offence mentioned under Part A, particularly offences with cross-border implications... for which no monetary threshold has been provided.

Section 2(1)(y) states the same position: the offences specified under Part A of the Schedule; or the offences specified under Part B of the Schedule if the total value involved in such offences is one crore rupees or more; or the offences specified under Part C of the Schedule.

Only the middle limb carries a condition.

What this means in practice. A Part A offence generating a small sum is still a scheduled offence, and the laundering of that small sum is still an offence under section 3 — where whosoever, directly or indirectly attempts to indulge... in any process or activity connected with the proceeds of crime is guilty.

A Part B offence generating less than the threshold is not a scheduled offence at all, so no money laundering prosecution can be built on it.

Note how narrow Part B is. It contains a single entry — section 132 of the Customs Act, 1962, false declaration, false documents, etc.

And note the trap. The same statute appears in Part A paragraph 12, through section 135 — evasion of duty or prohibitions — where no threshold applies. Two sections of one Act, in two different Parts, with two different treatments.

Part C is the cross-border Part, and the one that matters most in an IFSC: it covers an offence which is the offence of cross border implications specified in Part A, or the offences against property under Chapter XVII of the Indian Penal Code, or the offence of the wilful attempt to evade any tax, penalty or interest referred to in section 51 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

Three limbs, no threshold.

Twenty-nine paragraphs cover everything from poaching to pollution. Only a handful will ever arrive at a fund manager's desk.

Paragraph 11 — the SEBI Act, 1992. 12A read with section 24 — Prohibition of manipulative and deceptive devices, insider trading and substantial acquisition of securities or control, and 24 — Acquisition of Securities or Control.

Market manipulation and insider trading generate proceeds of crime, so profits from them are launderable and the transactions carrying them are reportable.

Paragraph 29 — the Companies Act, 2013, section 447, Punishment for fraud. Corporate fraud is a predicate offence in its own right.

Paragraph 1 — the cheating and forgery entries. IPC 420 → BNS 318(4), cheating and dishonesty inducing delivery of properties; IPC 467 → BNS 338, forgery of a valuable security, will, etc.; IPC 471 → BNS 340(2), using as genuine a forged document or electronic record. Falsified account-opening documents fall here.

Paragraph 8 — the Prevention of Corruption Act, 1988, including section 13, criminal misconduct by a public servant — the source of proceeds behind many politically exposed person cases.

Paragraph 4 — the UAPA, including section 17, punishment for raising fund for terrorist act and section 21, punishment for holding proceeds of terrorism. This is the paragraph behind the CFT half of the syllabus, and behind the fourth limb of the suspicious transaction definition — a transaction that gives rise to a reasonable ground of suspicion that it may involve financing of activities relating to terrorism.

Paragraph 12 and Part B — the Customs Act. Section 135, evasion of duty or prohibitions in Part A; section 132, false declaration, false documents in Part B. Both connect directly to Chapter 1's trade-based money laundering — the misrepresentation of the price, quantity or quality of imports or exports.

And Part C, for cross-border implications, including the offence of the wilful attempt to evade any tax, penalty or interest referred to in section 51 of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015.

Note that an IFSC entity does not decide whether an offence has occurred. Its duty is the Rule 3 one — record and report — while agencies like IFSCA, SEBI, CBI, customs, and police may be involved for parallel investigation of predicate (scheduled) offences.