Money-laundering attachment prevails over prior mortgage claims where property is shown as proceeds of crime and laundering continues.
Property shown to be proceeds of crime may remain subject to attachment under the money-laundering law even where a mortgagee bank claims a prior secured interest, because the statutory framework preserves legitimate claims without making a prior mortgage by itself sufficient to secure release. The inter se dispute between the bank and the mortgagors was treated as non-determinative. The document also states that the relevant enquiry is the date on which tainted property was laundered or projected as untainted, not merely the date of the predicate offence, because money-laundering is an independent and continuing offence. On that basis, retrospective non-application was rejected and the attachment was upheld.
Issues: (i) whether the provisional attachment confirmed under the Prevention of Money Laundering Act, 2002 could be interfered with at the instance of the mortgagee bank; (ii) whether the plea of non-applicability of the Act on account of pre-amendment predicate offences could defeat the attachment.
Issue (i): whether the provisional attachment confirmed under the Prevention of Money Laundering Act, 2002 could be interfered with at the instance of the mortgagee bank.
Analysis: The mortgaged hotel properties were found to be linked with proceeds of crime generated through corruption, bogus share capital, shell companies, and unexplained investment in the hotel project. The secured lender's interest was recognized as protected under the statutory scheme, particularly the provisions dealing with settlement of claims of legitimate interest in attached property. The mere existence of a prior mortgage did not by itself justify release of property shown to be involved in money-laundering, and the inter se dispute between the bank and the mortgagors was not determinative in these proceedings.
Conclusion: The challenge by the mortgagee bank to lift the attachment was rejected.
Issue (ii): whether the plea of non-applicability of the Act on account of pre-amendment predicate offences could defeat the attachment.
Analysis: The relevant enquiry was held to be the date on which the tainted property was projected as untainted and the act of money-laundering occurred, not merely the date of the scheduled offence. Money-laundering was treated as an independent and continuing offence, and the fact that the predicate offence had been committed earlier did not prevent action under the Act once the proceeds of crime were dealt with, layered, or projected as untainted after the Act became applicable.
Conclusion: The plea of retrospective non-application was rejected.
Final Conclusion: The attachment was upheld and the appeal failed, while the bank's rights, if any, were left to be worked out in accordance with the statutory framework governing attached property and the pending criminal proceedings.
Ratio Decidendi: Where property is shown to be proceeds of crime, a prior mortgage does not by itself displace attachment under the money-laundering law, and liability under the Act depends on the act of laundering or projection of tainted property as untainted, not merely on the date of the predicate offence.