SAFEMA Tribunal upholds provisional attachment of properties acquired before scheduled offence under money laundering provisions

The Appellate Tribunal under SAFEMA dismissed the appeal challenging provisional attachment orders under money laundering provisions. The appellant argued that attached properties were acquired prior to the alleged scheduled offence in 2015-2017. The Tribunal held that properties of equivalent value can be attached regardless of acquisition timing, whether before or after the crime commission. The law permits attachment of any property of equivalent value when proceeds directly obtained from crime have vanished or been siphoned off. The Tribunal clarified that "proceeds of crime" includes not only property derived directly from criminal activity but also any other property of equivalent value, finding no illegality in the attachment order.

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Issues Involved:

1. Whether the properties attached were acquired prior to the commission of the crime and thus do not qualify as "proceeds of crime" under the Prevention of Money Laundering Act, 2002.
2. Interpretation of "proceeds of crime" and whether properties of equivalent value can be attached if the actual tainted property is not traceable.

Issue-wise Detailed Analysis:

1. Acquisition of Properties Prior to Crime:

The appellant argued that the properties in question were acquired before the alleged criminal activities took place, specifically in 2015, while the FIR was registered on 08.08.2016, and the Provisional Attachment Order was issued on 29.06.2018. The appellant contended that since the properties were acquired before the commission of the alleged crime, they should not be considered as "proceeds of crime" under the Act of 2002. The appellant sought to set aside the order of confirmation passed by the Adjudicating Authority on this basis.

2. Definition and Scope of "Proceeds of Crime":

The respondent countered that under the Act of 2002, the definition of "proceeds of crime" is not limited to properties directly or indirectly obtained from the scheduled offence. It also includes properties of equivalent value if the actual proceeds have been siphoned off or are not traceable. The Tribunal emphasized that the definition of "proceeds of crime" under Section 2(1)(u) of the Act includes any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence, or the value of any such property. This broad definition allows for the attachment of properties of equivalent value even if they were acquired prior to the crime, provided the actual tainted assets are not available.

The Tribunal referred to various judgments, including those from the Delhi High Court and the Supreme Court, which have interpreted the definition of "proceeds of crime" to include properties of equivalent value when the actual tainted property is not available. The Tribunal noted that restricting the definition to only properties obtained directly or indirectly from the crime would undermine the objectives of the Act and allow offenders to evade the law by vanishing or siphoning off the proceeds of crime.

Conclusion:

The Tribunal concluded that the argument that only properties acquired directly or indirectly from the crime can be attached is not tenable. The Act allows for the attachment of properties of equivalent value when the actual tainted property is not traceable. The Tribunal dismissed the appeal, finding no merit in the issues raised by the appellant, and upheld the order of the Adjudicating Authority confirming the attachment of the properties.

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