Section 3 of PMLA : Section 3: Offence Of Money-Laundering

Explanation using Example

Imagine a business owner, John, who operates a chain of laundromats. Unknown to the public, John's laundromats are also used to launder money. John receives large sums of cash from a local drug trafficking organization and, instead of depositing this money directly into his business accounts, he mixes it with the legitimate income from his laundromats. He then records all the money as legitimate earnings in his business ledger, thereby 'cleaning' the drug money. John is knowingly involved in the concealment and projection of these proceeds of crime as untainted property. Under Section 3 of The Prevention of Money-Laundering Act, 2002, John would be guilty of the offence of money laundering because he is actively participating in the process of making illegal proceeds appear legal.