What Is A “Predicate Offence” And Why Does It Matter In Every ED Investigation?

Introduction

The Directorate of Enforcement (ED) is one of the few enforcement agencies in the Indian white-collar crime space that commands the most attention. Armed with the powers under the draconian provisions of the Prevention of Money Laundering Act, 2002 (PMLA), the ED is busy investigating high-profile cases of multi-crore financial frauds, political corruption and corporate irregularities. However, it is a misconception that the ED can launch a money laundering probe on a whim, on the discovery of a financial irregularity. In fact, the legal trigger for any ED action is based on a fundamental concept called the “Predicate Offence”.

Defining The Predicate Offence Under PMLA

To understand a predicate offence (interchangeably referred to as a “scheduled offence”), one must look at how the PMLA structures the crime of money laundering. Under Section 3 of the PMLA, money laundering is defined as directly or indirectly attempting, knowingly assisting, or being involved in any