Enforcement Jurisdiction: Director-FIU can impose penalties, but computation must be month wise and subject to mitigation.

Director-FIU had jurisdiction under Section 13(2)(d) read with the Prevention of Money Laundering (Maintenance of Records) Rules to impose penalties for failures to comply with reporting and record-keeping obligations; jurisdictional conclusion favoured respondent. The Tribunal held that "each failure" must be quantified month-to-month (per reporting period) rather than per individual transaction and reduced penalties accordingly. Applying the proportionality principle and allowing retrospective application of a beneficial 2013 amendment for mitigation, the Tribunal further moderated the quantum based on corrective measures and financial constraints; appeal partly allowed with re-quantified, reduced penalty.

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Issues: (i) Whether the Director, FIU-IND had jurisdiction under Section 13(2)(d) read with the Rules to impose penalties on the Bank for failures under Section 12 and the Rules; (ii) Whether the penalty under Section 13(2)(d) is to be quantified on a per-transaction basis or on a per-failure (month-wise) basis and whether the impugned quantum is disproportionate; (iii) Whether the amended provision conferring lesser remedies (including warning) introduced in 2013 applies retrospectively for moderation of penalty.

Issue (i): Whether the Director FIU-IND had jurisdiction to impose penalty under Section 13(2)(d) read with the PMLA Rules.

Analysis: The Tribunal examined the statute and the Rules including the definition of "Director" in sub-rule (c) of Rule 2(1) and the Rules framed under the PMLA which confer enforcement power on the Director for compliance with Rule 3 and related provisions. The Tribunal considered submissions that RBI is the regulatory authority for banks but noted that the PMLA and its Rules vest specific powers in the Director-FIU to impose penalty for failures to comply with reporting and record-keeping obligations.

Conclusion: The Director FIU-IND had jurisdiction to impose penalties under Section 13(2)(d) read with the Prevention of Money Laundering (Maintenance of Records) Rules, 2005. Conclusion in favour of Respondent on jurisdictional point.

Issue (ii): Whether penalty under Section 13(2)(d) is to be imposed per transaction or per failure (month-wise), and whether the quantum imposed was disproportionate.

Analysis: The Tribunal analysed statutory text, relevant judicial authorities and the RBI guidance on "integrally connected" transactions. It accepted the appellant's submission and supporting case-law that the term "each failure" in Section 13(2)(d) is to be construed on a month-to-month basis (each reporting period) rather than as a multiplier per individual transaction, particularly where reporting obligations require furnishing monthly information. The Tribunal also applied the doctrine of proportionality and considered the bank's small size, corrective measures taken and financial constraints as relevant mitigating factors.

Conclusion: The penalty calculated on a per-transaction basis was unsustainable. The Tribunal reduced the penalty and held that penalty should be imposed month-wise; accordingly reduced fines in favour of the Appellant.

Issue (iii): Whether the 2013 amendment enabling lesser remedies (including warning) is applicable for mitigating penalty.

Analysis: The Tribunal considered precedent holding that beneficial amendments enabling lesser punishment may be given retrospective effect where legislative intent supports a remedial construction. The Tribunal noted that while the contraventions dated from 2006-2013, the amended regime and judicial guidance justified taking a lenient view in fixation of quantum, though not to fully exonerate the bank.

Conclusion: The Tribunal accepted retrospective application of the amended, more lenient approach for purposes of mitigation and reduced the penalty accordingly; conclusion in favour of Appellant on mitigation.

Final Conclusion: Overall the appeal is partly allowed; the Tribunal upheld the Director's jurisdiction but reduced and re-quantified the monetary penalty by applying month-wise computation and proportionality-based mitigation, directing deposit of the reduced amount within six months.

Ratio Decidendi: For failures to furnish monthly reports under the PMLA Rules, "each failure" under Section 13(2)(d) is to be quantified on a month-to-month (per reporting period) basis rather than as a multiplicative penalty per individual transaction, and proportionality and retrospective application of beneficial amendments permit mitigation of penalty where justified by facts such as corrective measures and financial incapacity.

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