Question

A charitable organization receives donations from anonymous donors amounting to Rs. 2 crores. The organization uses this money for legitimate charitable purposes. The donor's source is unclear. Under PMLA, which statements are correct? Statement 1: Anonymous donations automatically constitute proceeds of crime under PMLA. Statement 2: If the charitable organization has reasonable belief that donations are from legitimate sources, no PMLA action can be initiated. Statement 3: If investigation reveals donations are connected to a scheduled offence, the money becomes proceeds of crime despite being used for charitable purposes. Statement 4: Charitable purposes provide immunity from PMLA provisions. Which statements are correct?

A Statements 1 and 4 only Correct Answer Incorrect Answer
B Statement 3 only Correct Answer Incorrect Answer
C Statements 2 and 3 only Correct Answer Incorrect Answer
D Statements 1 and 2 only Correct Answer Incorrect Answer
E All statements are correct Correct Answer Incorrect Answer

Solution

Statement 1 is incorrect—anonymity alone does not make something proceeds of crime. Statement 2 is incorrect—reasonable belief is not a defense to PMLA. Statement 3 is correct—if proceeds are connected to scheduled offences, the purpose to which they are put is irrelevant; they remain proceeds of crime. Statement 4 is incorrect—charitable purposes do not provide immunity under PMLA. Statement 3 alone is correct.

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