Liability of Companies, Body-Corporate as well as a firm or other association of individuals, whether incorporated or not, and their directors, managers, secretary or other officers including Partner of a Firm under AML of India (Prevention of Money Laundering Act, 2002 [PMLA])
Section 70 of the PMLA, deals with the offences by Companies and the liability of the persons responsible for the conduct of the business affairs of the Company.
Section 2 (s) of the PMLA define the term Person, who may be held liable for commission of an offence and related consequence under PMLA. The term "Person", as defined under Section 2 (s) of PMLA, includes the following:
(i) an individual,
(ii) a Hindu undivided family,
(iii) a company,
The definition of "company" under PMLA is wide enough and inclusive. The term "Company" as defined under PMLA includes any Body-Corporate as well as a firm or other association of individuals, whether incorporated or not.
(iv) a firm,
(v) an association of persons or a body of individuals, whether incorporated or not,
(vi) every artificial juridical person, not falling within any of the preceding sub-clauses, and
(vii) any agency, office or branch owned or controlled by any of the above persons mentioned in the preceding sub-clauses.
Accordingly, a company can be held liable under the provisions of PMLA. Since, a company is a juristic person, having an artificial legal presence only, it acts through natural persons who are in charge of, and are responsible for the conduct of the business of the company.
Any person (a company) committing a contravention of any of the provisions of this Act or of any rule, direction or order made thereunder, then every person who, at the time the contravention was committed, was in charge of, and was responsible to the company, for the conduct of the business of the company as well as the company, shall be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished as per the relevant provisions of PMLA.
However, such person shall not be held liable for punishment if he proves that the contravention took place without his knowledge or that he exercised all due diligence to prevent such contravention.
Still if a contravention of any of the provisions of PMLA or of any rule under PMLA, or of a direction or order made under PMLA, has been committed by a company and it is proved that the contravention has taken place with the consent or connivance of, or is attributable to any neglect on the part of any director, manager, secretary or other officer of any company including Partner of a Firm, such director, manager, secretary or other officer including Partner of a Firm shall also be deemed to be guilty of the contravention and shall be liable to be proceeded against and punished accordingly.
It is important to note that a company (legal juridical person) may be prosecuted for commission of an offence under PMLA, notwithstanding whether the prosecution or conviction of any such company / legal juridical person shall be contingent on the prosecution or conviction of any individual.
You may also refer to the following link for details on anti-money laundering (AML) laws in India: http://moneylaundering.legal .
*Vijay Pal Dalmia, Advocate & Partner Vaish Associates
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