Prospective Application of Anti-Money Laundering Law
CRIMINAL LAW
In Criminal Appeal No. 21 of 2022, Sharjeel Javed and others challenged the decision of the Special Court (Customs, Taxation & Anti-Smuggling), Rawalpindi & ICT, dated 22.12.2021. The case revolved around allegations of money laundering linked to tax evasion for the tax years 2012 to 2016. The appellants sought to overturn the dismissal of their application under Section 265-K Cr.P.C., which argued for the quashing of proceedings on the grounds of insufficient evidence and jurisdictional overreach.
Key Issues:
Jurisdiction of Tax Authorities: The appellants contended that the tax authorities had no jurisdiction to invoke Sections 192/192-A of the Income Tax Ordinance, 2001, in conjunction with the Anti-Money Laundering Act, 2010 (AMLA), for alleged tax evasion in 2014, as these provisions were added to the AMLA schedule only in May 2016.
Validity of Proceedings: The appellants argued that the proceedings were initiated without sufficient evidence to support the allegations of money laundering and that their properties and accounts were unlawfully attached.
Prospective Application of Law: The core legal question was whether the AMLA could be applied retrospectively to actions taken before the inclusion of Sections 192/192-A in its schedule.
Case Law: Iqbal Singh Marwah vs. Meenakshi Marwah (AIR 2005 SC 2119), emphasized strict interpretation of penal statutes. Govind Ram vs. Federation of Pakistan (2022 PTD Karachi 634), discussed premature application of AMLA provisions to unaccounted income without proper investigation under the Income Tax Ordinance.
Court’s Analysis:
Jurisdiction and Evidence: The court highlighted that the AMLA, intended to prevent money laundering and related financial crimes, could not be retrospectively applied to actions before the inclusion of relevant tax evasion offenses in its schedule. The proceedings against the appellants, based on alleged tax evasion in 2014, were thus beyond the jurisdiction of the investigating officer and the Special Court.
Procedural Lapses: The court noted that the notice issued under Section 9(1) of AMLA and the subsequent investigation were flawed. The initiation of proceedings based on the tax evasion findings from 2012 to 2016 was premature, as the appellants were not provided an adequate opportunity to explain the unaccounted money.
Principles of Penal Interpretation: Emphasizing the principle of strict construction of penal statutes, the court concluded that the retrospective application of the AMLA provisions violated the appellants' rights. The prosecution failed to establish a clear linkage between the unaccounted money and proceeds of crime under the AMLA.
Conclusion: The Islamabad High Court allowed the appeal, setting aside the Special Court's order dated 22.12.2021. The court declared the proceedings under AMLA against the appellants illegal and beyond jurisdiction. The appellants were acquitted, and the trial court's proceedings were nullified. However, the court noted that the prosecution could initiate new proceedings under AMLA for actions occurring after the inclusion of relevant offenses in the schedule, if warranted by evidence.
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