Supreme Court Rules Accomplices Can Be Punished for Money Laundering

Kathmandu. The Supreme Court has interpreted that accomplices can also be punished to bring those involved in money laundering offenses within the legal framework.

The joint bench of Justices Hariprasad Phuyal and Nripadhwaj Niroula, interpreting the 'Money Laundering Prevention Act', has ruled that even if the main crime or related offense (such as smuggling, corruption, etc.) is not proven, 'accomplices' who assist in the transfer or management of suspicious assets can be punished. The full text of the Supreme Court's verdict in the money laundering case of Pradeepkumar Chaurasiya was recently made public. 

The Supreme Court has established a precedent that money laundering penalties apply not only to the main offender but also to those who assist in committing the offense.

“If the recovered assets appear unnatural compared to the respondent's income source or financial status, the burden of proving the legitimate source of those assets will lie with the respondent. If the respondent fails to prove the source, it is understood that they have committed the crime of money laundering,” the verdict states, “This special legal obligation applies equally not only to the main offender but also to the accomplices who provide the means used in the commission of the offense. 

“Money laundering is not a related offense in itself, but rather a co-offense created as a co-product of the main offense. The main objective of this Act is to stop the cycle of laundering assets earned by concealing the main offense,” the full text of the verdict states, “Section 29, Sub-section (1) of the same Act states that 'Nothing else written in this Act shall prevent proceedings from being initiated for any one or both of the offenses of related offense or money laundering based on the evidence obtained during the investigation of a complaint filed under this Act.'

Similarly, Sub-section (2) of the same section states that 'The fact that proceedings have not been initiated or concluded for the related offense under Sub-section (1) shall not prevent proceedings from being initiated and punishment being imposed for the offense of money laundering.' This provision has been continued even with the latest amendment made on 2082/12/30. The mentioned legal provision establishes money laundering as an independent offense, stating that there is no obstacle to initiating proceedings and imposing punishment for money laundering even when proceedings for the related offense have not been initiated or concluded. 

Taking the money laundering case against Madhavkumar Bhagat and the Government of Nepal as a precedent, the Supreme Court stated, “The party claiming that the assets were obtained from their trade, business, or any other person without the intention of money laundering must prove it with objective evidence. Furthermore, if any unnatural assets are found compared to one's financial status, the legal obligation under Section 28 of the Money Laundering Prevention Act, 2064, is on the individual to prove the source of such assets. Therefore, after unnatural assets were recovered from the appellant respondent, the legal obligation to show the source of asset acquisition also lies with the same individual.”

Clarifying the principle of the burden of proof in money laundering cases, the Supreme Court stated, “In a money laundering case, if unnatural assets are found with someone, the burden of proving that the assets are legitimate lies with the accused.” The Supreme Court's verdict states that Pradeep and Babita could not show the legitimate source of the money. Citing the precedent of Bhagat in the full text of the verdict, the Supreme Court stated, “Since there is no mandatory provision that the related offense must have been previously punished or a case must have been filed, and the latest amendment of 2080/12/30 has not made any changes to this provision, the contention that they should be acquitted by taking advantage of the amended law is not found to be otherwise in terms of justice, law, and evidence evaluation. Considering the universally accepted principle of criminal jurisprudence that the law does not exempt those who commit offenses by engaging in prohibited and controlled acts, and that ignorance of the law is not excusable, the Special Court Kathmandu has upheld the decision of the Special Court Kathmandu, which imposed half the punishment of the main offender on the appellant respondents Babita Kumari and Pradeep Kumar Chaurasiya for the offense of money laundering, considering their role as accomplices. 

“Motorcycle owners must be vigilant about who is taking their vehicle, for what purpose, and where it is being taken,” the verdict states, “Providing a vehicle for suspicious border crossing or illegal money transfer constitutes playing the role of an accomplice.” While in ordinary criminal cases, the prosecution must prove the evidence, the court has reinterpreted the special provision under Section 28 of the Money Laundering Prevention Act, where the burden of showing the legitimate source of recovered assets lies with the defendant. 

The court has ruled that it is the legal and civic duty of the owner to prevent their vehicle from being used for illegal activities. “A foreign national using a Nepali motorcycle to transport a large sum of cash across the border requires the owner to exercise sufficient caution,” the verdict states.

The respondents had argued that money laundering could not be punished without proving the 'main offense' (such as theft or smuggling). However, the court clarified by citing Section 29 of the Money Laundering Prevention Act that “there is no obstacle to initiating proceedings and imposing punishment for money laundering even when proceedings for the related offense have not been initiated or concluded.” 

What was the case?

A team from the District Police Office, Parsa, was on duty near Shankaracharya Gate in Birgunj Metropolitan City-16. The police stopped two motorcycles coming from Raxaul, India, towards Birgunj. 

Upon searching the person and clothes of Balen Yadav (Balshwar Prasad Yadav), who was riding motorcycle no. Na. 58 Pa. 8839, 850,000 Nepali rupees and some Indian rupees were found hidden in his waist and inside an 'anglet' on his leg. Similarly, 500,000 Nepali rupees and a mobile phone were recovered from Ranjan Kumar Das, who was riding motorcycle no. Na. 25 Pa. 3856. 

The police took them into custody with a total of 1,350,000 Nepali rupees and Indian rupees. During the investigation, it was revealed that the motorcycles did not belong to them but to other individuals. Motorcycle no. Na. 58 Pa. 8839 was registered in the name of Babita Kumari, and motorcycle no. Na. 25 Pa. 3856 was registered in the name of Pradeepkumar Chaurasiya. 

During their statements in court, Balen and Ranjan gave various stories to hide the source of the money. Balen Yadav claimed it was money from selling land for his uncle's cancer treatment, while Ranjan Das said it was money borrowed to buy a tempo. However, the motorcycle owners, Babita and Pradeep, claimed they were innocent and had lent the motorcycles out of human or neighborly relations, and they were unaware that the riders were carrying illegal money. 

The Special Court ruled on this matter in 2078, holding Balen Yadav and Ranjan Das as the main offenders and sentencing them to imprisonment and fines. Additionally, the motorcycle owners Babita and Pradeep were deemed accomplices (assisting individuals) and sentenced to half the punishment of the main offenders (1 year imprisonment and a fine), and the motorcycles were confiscated. Against this verdict, Pradeep and Babita appealed to the Supreme Court, arguing that they could not be made accomplices without their knowledge of the motorcycle's use and without the main offense being clearly established.