Corporate Liability Under Section 70 PMLA: Company Offence and Individual Responsibility

Section 70 PMLA addresses offences by companies and other associations. It can extend liability beyond the entity, but it does not justify naming every director or officer without allegations connecting that person to responsibility and conduct.

Two routes of liability

Where a company contravenes the Act, a person who was in charge of and responsible for its business at the relevant time may fall within the deeming provision, subject to the statutory defence concerning lack of knowledge or due diligence. Separately, liability may arise where the offence occurred with a director’s, manager’s, secretary’s or other officer’s consent, connivance or attributable neglect.

Role-specific pleading

A designation does not explain actual responsibility. A prosecution complaint should identify the relevant period, business function, decisions, transactions and alleged connection to proceeds of crime. Independent and non-executive directors require the same statutory analysis rather than collective attribution.

Compliance implications

Companies should maintain beneficial-ownership records, approval trails, source-of-funds checks, related-party documentation and escalation records. Due diligence must be real and contemporaneous. A policy prepared after investigation is not proof that controls operated when the transaction occurred.

No automatic guilt

Section 70 establishes attribution rules; the prosecution must still prove a company offence and the applicable individual route. Defences and factual responsibility are adjudicated on evidence, not resolved by corporate title alone.

Sources

Prevention of Money-Laundering Act, 2002, Section 70: https://dor.gov.in/prevention-money-laundering

Prevention of Money-Laundering (Maintenance of Records) Rules, 2005: https://dor.gov.in/prevention-money-laundering

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