Predicate offence and reason to believe: investigative material can justify ECIR registration and arrest under PMLA.

Requirement for a scheduled predicate offence and a written 'reason to believe' based on material are central to ECIR registration and arrest under the PMLA; the article explains that investigative material-FIRs (including a live FIR), search records, seized documents, statements, addenda and linkages to payment gateways-was held sufficient to infer generation and layering of proceeds of crime, justify tracing of assets and custodial interrogation, and thus to form the requisite belief under Section 19 of the PMLA; the writ challenging ECIR registration and arrest was dismissed on that basis.

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Issues: Whether there existed a predicate scheduled offence and sufficient material giving the Enforcement Directorate reason to believe that the arrested person was guilty of an offence under the Prevention of Money Laundering Act, 2002, justifying registration of an ECIR and arrest under Section 19 of the PMLA, 2002.

Analysis: The legal framework requires a scheduled offence as predicate for an ECIR and that the arresting officer form a reason to believe, recorded in writing, based on material in possession that the person is guilty of money laundering as defined in Section 3 of the PMLA, 2002; proceeds of crime are defined under Section 2(1)(u) of the PMLA, 2002. The material relied upon included multiple FIRs and investigative material, addenda to the ECIR, search statements and seized material indicating operation of online betting platforms, receipt and layering of funds, asset purchases and links to payment gateways and associates. Although several earlier FIRs had been closed or acquittals recorded, one FIR remained pending and the investigation disclosed a wider network and evidence of proceeds being generated and laundered. On the record, the authority relied upon the remaining live FIR and investigative material to infer generation and laundering of proceeds, the need to trace further proceeds and the requirement for custodial interrogation. The material was held sufficient to give a reasonable person cause to form the requisite belief under Section 19 of the PMLA, 2002.

Conclusion: The existence of a predicate scheduled offence and sufficient material to form reason to believe for registration of an ECIR and arrest under Section 19 of the Prevention of Money Laundering Act, 2002 is established; the writ petition challenging the ECIR and arrest is dismissed (decision in favour of the respondent).

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