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Separate Investigations is required for Tax Evasion and Money Laundering Cases under the Anti-Money Laundering Act, 2010 --- Islamabad High Court, Islamabad

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Separate Investigations is required for Tax Evasion and Money Laundering Cases under the Anti-Money Laundering Act, 2010 --- Islamabad High Court, Islamabad

Islamabad 25-07-2024: In a significant ruling, the Islamabad High Court, presided over by Mr. Justice Mohsin Akhtar Kayani, acquitted appellants in a high-profile money laundering case. The Court set aside the order dated 22-12-2021, issued by the Special Court (Customs, Taxation & Anti-Smuggling), Rawalpindi/ICT, which had dismissed the appellants' application under section 265-K of the Criminal Procedure Code (Cr.P.C.).

The case revolved around allegations of money laundering stemming from proceeds of crime as defined under the Anti-Money Laundering Act, 2010. The appellants were accused of being involved in tax evasion, invoking sections 192/192-A of the Income Tax Ordinance, 2001, and section 8 of the Anti-Money Laundering Act, 2010.

The case initiated with a notice issued on 3 September 2020, under section 9(1) of the Anti-Money Laundering Act, 2010, alleging that the appellants were involved in proceeds of crime. The tax authorities attached the appellants' properties and accounts on 27 August 2020, leading to multiple legal battles, including a writ petition (No. 2834/2020) dismissed on 29 March 2021, advising the appellants to seek remedy under section 265-K Cr.P.C.

The appellants contended that the criminal proceedings were invalid as the provisions of the Anti-Money Laundering Act, 2010, could not be retroactively applied to the tax year 2014. They argued that the Special Court's order was flawed and lacked jurisdiction.

Conversely, the State maintained that the issues raised by the appellants required evidence and the application under section 265-K Cr.P.C. was premature.

Mr. Justice Mohsin Akhtar Kayani analyzed the definitions and scope of money laundering, referencing international laws and conventions. He emphasized the necessity for a clear demonstration of proceeds of crime as defined under section 3 of the Anti-Money Laundering Act, 2010. The Court highlighted the requirement for separate investigations for tax evasion and money laundering, citing section 2(xxvi) and Schedule-I of the Anti-Money Laundering Act, 2010.

Laws, especially penal statutes, cannot be applied retroactively unless explicitly stated. The Court stressed that actions committed before the enactment or amendment of a law cannot be prosecuted under the new provisions. Legal proceedings initiated without proper jurisdiction or based on provisions not in effect at the relevant time are invalid. Money laundering involves the conversion or transfer of property derived from crime, disguising its illicit origin. The prosecution must align with both national and international legal standards. Predicate offences must be clearly defined and included in the schedule of the Anti-Money Laundering Act. Dual prosecution for tax evasion and money laundering requires separate investigations. The inherent powers of the High Court under section 561-A Cr.P.C. can be exercised to prevent abuse of the process of any Court and to secure the ends of justice.

The Court allowed the appeal, set aside the impugned order dated 22-12-2021, and acquitted the appellants. The proceedings of the trial Court were declared beyond its legal jurisdiction. However, the prosecution was not barred from initiating de-novo proceedings within the legal framework post-14 May 2016, when the relevant provisions were incorporated into the Anti-Money Laundering Act, 2010.

This landmark judgment underscores the importance of adhering to jurisdictional and procedural requirements in criminal proceedings and reinforces the principle of non-retroactive application of penal statutes.