Money Without Borders: How PMLA Reaches Foreign Assets, Cross-Border Offences and Overseas Evidence

An Indian money-laundering case does not stop at the territorial border merely because an account, company, trust, digital wallet, witness or asset is abroad. The Prevention of Money-Laundering Act, 2002 contains three distinct cross-border mechanisms: Part C of the Schedule can make specified conduct a scheduled offence because of its cross-border implications; Section 2(1)(u) can reach equivalent-value property when proceeds are taken or held outside India; and Chapter IX creates formal machinery for evidence, restraint and confiscation assistance between India and contracting States.

Those mechanisms solve different problems. An overseas transfer does not by itself create a scheduled offence. The Enforcement Directorate must still identify criminal activity satisfying the Schedule, establish property derived or obtained from it, and prove the relevant Section 3 process or activity. Geography expands the investigative and recovery route; it does not replace the statutory ingredients.

The threshold concept: cross-border implications

Section 2(1)(ra) defines conduct having “cross border implications”. In substance, it covers two directions of movement. One is conduct in India constituting an offence under Part A, Part B or Part C of the Schedule where proceeds of crime are transferred or attempted to be transferred from India to a place outside India. The other is conduct outside India which constitutes an offence there, would also have constituted an offence specified in Part A, Part B or Part C had it occurred in India, and where proceeds are transferred or attempted to be transferred to India.

This definition requires more than an international connection in the abstract. The alleged conduct, corresponding offence and movement or attempted movement of proceeds must fit the statutory formulation. An offshore shareholder, foreign email or overseas counterparty may be evidence, but none automatically proves cross-border implications.

Part C is a gateway, not a description of every foreign transaction

Section 2(1)(y) recognises three classes of scheduled offence. Part A contains listed offences without a general monetary threshold. Part B presently concerns the specified Customs Act offence subject to the statutory value threshold. Part C addresses offences having cross-border implications.

Part C includes an offence specified in Part A when it has cross-border implications, an offence against property under the former Chapter XVII of the Indian Penal Code, 1860 when it has such implications, and specified conduct involving wilful attempts to evade tax, penalty or interest under the tax laws identified there. The text of the current Schedule and the date of the alleged conduct must be checked rather than inferred from a broad label.

In Pavana Dibbur v. Directorate of Enforcement, 2023 INSC 1029, the Supreme Court gave Part C real interpretive work. Paragraphs 20–22 explain that theft, dishonest misappropriation and criminal breach of trust were not, merely by their nature, scheduled offences under Parts A or B in the setting before the Court. They entered the Schedule through Part C only when they had cross-border implications. The Court used that structure to reject an interpretation that would make every conspiracy to commit an otherwise unscheduled offence a scheduled offence merely because former Section 120-B IPC appeared in Part A.

The holding matters beyond conspiracy. The Schedule is selective and must be applied as enacted. A case capable of generating unlawful gain is not necessarily a PMLA predicate. In Pavana Dibbur, the absence of a qualifying scheduled offence resulted in the PMLA complaint being quashed against the appellant, although the Court separately held that a person prosecuted for laundering need not also be an accused in the predicate case.

For conduct after 1 July 2024, historical IPC labels require a careful Bharatiya Nyaya Sanhita, 2023 analysis. The BNS reorganised offences against property and conspiracy; there is no safe rule of mechanical number substitution. The date of conduct, saving provisions, exact offence ingredients and the PMLA Schedule in force must all be examined.

Foreign property within “proceeds of crime”

Section 2(1)(u) extends beyond the original tainted asset. It covers property derived or obtained, directly or indirectly, from criminal activity relating to a scheduled offence, the value of that property, and—where such property is taken or held outside India—property equivalent in value held in India or abroad.

Vijay Madanlal Choudhary v. Union of India, 2022 INSC 757, (2023) 12 SCC 1, paragraphs 105–108, confirms both the breadth and the boundary. Indirect, transformed and equivalent-value property may be reached; yet a source-link to scheduled criminal activity is indispensable. Property used to commit an offence is not necessarily property derived from it, and lawful property does not become proceeds merely because it is unaccounted.

The practical consequence is important. If identified proceeds have been transferred to an overseas account or converted into foreign property, the Directorate need not abandon recovery. It may pursue the foreign asset through cooperation machinery and, where the statutory conditions are met, proceed against equivalent value. But the record should identify the original proceeds, explain their transfer or unavailability, quantify the value rationally and prevent duplicate restraint across jurisdictions.

Chapter IX: who is a contracting State?

Sections 55–61 form Chapter IX. Section 55 defines a “contracting State” as a country or place outside India for which arrangements have been made by the Central Government through a treaty or otherwise, and identifies the corresponding court or authority. Section 56 authorises agreements with foreign governments for enforcing the Act, exchanging information for prevention or investigation of PMLA offences and implementing the Act’s provisions.

The existence and terms of the relevant treaty, notification or arrangement matter. Mutual assistance is not an informal investigator-to-investigator shortcut. The request must travel through the authority and form prescribed by Indian law, the governing arrangement and the requested State’s law.

An outgoing request from India

Under Section 57, where a Special Court considers that evidence may be available in a contracting State, it may issue a letter of request to the appropriate foreign court or authority. The request may seek examination of facts and circumstances, collection of evidence and transmission of the evidence to the issuing Special Court. Material received in execution of the request is treated in accordance with the statutory provision.

The application should be precise. It ordinarily needs the case and statutory basis, facts establishing dual or corresponding criminality where required, persons and accounts concerned, the exact evidence or coercive measure sought, relevance, time period, confidentiality needs, limitation considerations and assurances required by the treaty. A demand framed as a fishing inquiry risks delay or refusal.

An incoming request to India

Section 58 governs assistance when a contracting State requests investigation of a money-laundering offence or assistance concerning attachment or confiscation. The Central Government may forward the request to the authority it considers fit for execution under the PMLA or other applicable Indian law. Sections 58A and 58B address release, confiscation and restoration-related requests in the circumstances specified by the Act.

Execution remains subject to Indian law and the applicable arrangement. A foreign request does not automatically prove the allegation, transfer title or dispense with the hearing and adjudicatory protections that Indian legislation requires.

Process, restraint and confiscation across borders

Section 59 permits reciprocal arrangements concerning service or execution of summonses, warrants and judicial processes. Section 60 addresses attachment, seizure and confiscation where property is in a contracting State or where a foreign request concerns property in India. The statutory route involves the Special Court, the Director and the Central Government as the provision requires; it is not interchangeable with an ordinary administrative email.

Section 61 requires every letter of request, summons or warrant received from or transmitted to a contracting State under Chapter IX to follow the form and manner specified by the Central Government. The Ministry of Home Affairs’ Comprehensive Guidelines for investigation abroad, Letters Rogatory, mutual legal-assistance requests and service of process supply operational guidance. They emphasise focused drafting, proper routing, treaty compliance and usable supporting documentation.

PMLA and the general criminal-procedure route

Chapter VIII of the Bharatiya Nagarik Suraksha Sanhita, 2023 now provides the general reciprocal-assistance framework for criminal matters. Sections 111–124 cover definitions, outgoing and incoming letters of request, transfer of persons, assistance concerning attachment or forfeiture, identification of unlawfully acquired property, seizure, management, forfeiture and the prescribed transmission of requests.

These provisions correspond broadly to former Sections 105A–105L of the Code of Criminal Procedure, 1973, but current applications must use the correct law after commencement and respect Section 531 BNSS savings for pending matters. In a PMLA case, the special provisions of Chapter IX must be read with the BNSS framework and the applicable treaty rather than assuming that one route silently displaces every other.

Proof of overseas documents and electronic records

Obtaining a document and proving it are separate tasks. Foreign bank statements, company registries, beneficial-ownership records, server data and witness statements raise questions of identity, completeness, translation, certification, authorship, electronic integrity and chain of custody.

The Bharatiya Sakshya Adhiniyam, 2023 governs current evidentiary questions, subject to its savings provision. Sections 61–63 address electronic and digital records and admissibility requirements. Sections 74–77 deal with public documents and proof through certified copies; Section 77 specifically addresses proof of official documents, including foreign public documents. Section 88 concerns the presumption applicable to certified copies of foreign judicial records. Historical proceedings may remain governed by the Indian Evidence Act, 1872 under the applicable savings rule.

A formally executed mutual-assistance request can provide an authenticated route and provenance, but it does not make every statement automatically conclusive. Relevance, admissibility, hearsay questions, electronic-record compliance and the right to contest reliability remain governed by law.

Double restraint and proportionality

Parallel restraint is sometimes necessary to prevent dissipation, but recovery must be coordinated. If the same €5 million is frozen abroad and an equivalent ₹ amount is attached in India, the record should disclose both measures, currency-conversion date, valuation method and whether the restraints are alternative or cumulative. The State may preserve value pending adjudication; it should not achieve confiscation twice for one quantified benefit.

The same discipline applies where foreign property belongs partly to an independent person or secures a lender. Title, beneficial ownership, consideration, timing, notice and local-law interests should be placed before the competent forums in both jurisdictions.

Practical checklist

For investigators, a sustainable cross-border file should identify the qualifying Schedule entry, plead the Section 2(1)(ra) movement facts, map the proceeds, preserve domestic evidence, choose the correct treaty channel, formulate a specific request and maintain a global restraint-and-recovery ledger.

For the defence or an affected third party, the key questions are whether the offence actually falls within Part C; whether dual criminality or treaty conditions are met; whether the property moved is genuinely derived from scheduled criminal activity; whether foreign material was lawfully obtained and properly proved; and whether domestic equivalent-value attachment duplicates a foreign freeze.

Businesses with legitimate cross-border operations should retain beneficial-ownership records, board approvals, invoices, banking trails, customs and remittance documents, transfer-pricing support and records explaining commercial purpose. An offshore structure is not laundering by itself. Concealment, circular movement and unexplained control may, however, become powerful circumstantial evidence when connected to identified proceeds of crime.

Conclusion

PMLA’s cross-border design is comprehensive but structured. Part C determines when specified conduct becomes a scheduled offence because of cross-border implications. Section 2(1)(u) preserves recoverable value when proceeds are abroad. Chapter IX provides the formal bridge for evidence, process, attachment and confiscation assistance.

Each bridge has legal conditions. The strongest case is not the one with the most foreign names; it is the one that proves the scheduled-offence gateway, follows the proceeds, uses the correct reciprocal mechanism, authenticates the evidence and accounts transparently for every asset restrained in every jurisdiction.

Sources

Prevention of Money-Laundering Act, 2002, particularly Sections 2(1)(ra), 2(1)(u), 2(1)(y), 3, 5 and 55–61 and Part C of the Schedule: https://www.indiacode.nic.in/handle/123456789/15402

Pavana Dibbur v. Directorate of Enforcement, 2023 INSC 1029, particularly paragraphs 11–28: https://api.sci.gov.in/supremecourt/2022/42568/42568_2022_8_1501_48657_Judgement_29-Nov-2023.pdf

Vijay Madanlal Choudhary v. Union of India, 2022 INSC 757, (2023) 12 SCC 1, particularly paragraphs 105–108 and 454–455: https://api.sci.gov.in/supremecourt/2014/19062/19062_2014_3_1501_36844_Judgement_27-Jul-2022.pdf

Bharatiya Nagarik Suraksha Sanhita, 2023, particularly Sections 111–124 and 531: https://www.indiacode.nic.in/handle/123456789/21615

Bharatiya Sakshya Adhiniyam, 2023, particularly Sections 61–63, 74–77, 88 and 170: https://www.indiacode.nic.in/handle/123456789/20063

Ministry of Home Affairs, Comprehensive Guidelines for investigation abroad, Letters Rogatory, mutual legal assistance and service of judicial documents, 4 December 2019: https://www.mha.gov.in/sites/default/files/ISII_ComprehensiveGuidelines_17122019.pdf

This article provides general legal information and is not legal advice concerning any investigation, overseas request, attachment or prosecution.

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