2024 (6) TMI 587 - AT - Money Laundering

SAFEMA Tribunal upholds provisional attachment orders under PMLA section 24 for illegal foreign remittances scheme

Shri Rajeev Wadhwa Versus The Deputy Director Directorate of Enforcement, Delhi, Kamakhya Forex Pvt. Ltd. Versus The Deputy Director Directorate of Enforcement, Delhi, M/s. P.R. Forex Pvt. Ltd. Versus The Deputy Director Directorate of Enforcement, Delhi, Parvesh Kumar Gujral Versus The Deputy Director Directorate of Enforcement, Delhi, Gurdeep Kumar Gujral Versus The Deputy Director Directorate of Enforcement, Delhi, Subhash Arora Versus The Deputy Director Directorate of Enforcement, Delhi And Rakesh Jain Versus The Deputy Director Directorate of Enforcement, Delhi

The Appellate Tribunal under SAFEMA dismissed appeals challenging provisional attachment orders under PMLA, 2002. The case involved illegal foreign ... Money Laundering - provisional attachment order - making illegal foreign remittances to Hong Kong through banking channels by submitting fake import documents to the banks - HELD THAT:- The prosecution complaints under PMLA, 2002 have been filed and proceedings arising out of the same are pending against all the appellants involved in these appeals. Evidence exists in the form of statements of witnesses, including that of the main accused and other accused persons apart from other evidence, which incriminate the appellants. On the other hand, other than bare denials, the appellants have not presented any credible evidence to discharge their burden of proof under section 24 of the Act. It is by now well-settled that under PMLA, 2002 provisional attachment of property is an emergent measure to be taken by the designated authority upon being satisfied and having reason to believe that the proceeds of crime are likely to be concealed, transferred or dealt with in any manner, which may result in frustrating any proceedings relating to confiscation of such proceeds of crime. The purpose of such attachment is to protect and preserve the proceeds of crime until the guilt or innocence of the person, as the case may be, is established. The Hon’ble Supreme Court in Vijay Madanlal Choudhary & Ors. v. UoI & Ors., [2022 (7) TMI 1316 - SUPREME COURT], has observed that it is clear that the provision in the form of Section 5 provides for a balancing arrangement to secure the interest of the person as well as to ensure that the proceeds of crime remain available for being dealt with in the manner provided by the 2002 Act. Under section 2(1)(d) of the Act, “attachment” has been defined to mean prohibition of transfer, conversion, disposition or movement of property. Attachment of property does not prevent the person from use and enjoyment of the property. There are no grounds to interfere with the order of the Ld. Adjudicating Authority in the instant set of appeals - appeal dismissed. Issues Involved:1. Legitimacy of Provisional Attachment Order (PAO) and its confirmation by the Adjudicating Authority (AA).2. Involvement of appellants in the alleged money laundering activities.3. Legitimacy of the attached properties and their connection to proceeds of crime.4. Procedural fairness and adherence to legal standards in the investigation and attachment process.Summary:Legitimacy of Provisional Attachment Order (PAO):The appeals challenge the order of the learned Adjudicating Authority (AA) u/s 5(1) of the Prevention of Money Laundering Act, 2002 (PMLA, 2002), confirming the PAO passed by the Directorate of Enforcement, Delhi, attaching various properties of the appellants. The AA's order dated 09.07.2018 confirmed the PAO, which attached movable properties valued at Rs. 3,59,22,534/- and immovable properties valued at Rs. 12,43,000/-.Involvement of Appellants in Alleged Money Laundering Activities:The appellants contended that they were not named in the FIR or ECIR and had no involvement in the alleged illegal activities. They argued that the allegations against them were false and baseless. However, the respondents presented evidence, including statements from various individuals, showing the involvement of the appellants in a complex web of interconnected transactions for remitting foreign exchange abroad through fraudulent means.Legitimacy of Attached Properties:The appellants claimed that the attached properties were acquired from legitimate sources, duly disclosed in their income tax returns. They argued that there was no evidence linking the attached properties to proceeds of crime. The respondents, however, provided evidence indicating that the properties were linked to money laundering activities and were acquired through proceeds of crime.Procedural Fairness and Legal Standards:The appellants argued that the investigation and attachment process was conducted with mala fide intentions and without due application of mind. They claimed that their submissions were ignored by the AA. The respondents countered that the provisional attachment was an emergent measure to prevent the proceeds of crime from being concealed or transferred, as per the legal standards set by the PMLA, 2002.Consideration and Findings:The Tribunal noted that prosecution complaints under PMLA, 2002, were filed and proceedings were pending against all appellants. Evidence, including statements of witnesses and accused persons, incriminated the appellants. The Tribunal found that the appellants failed to discharge their burden of proof u/s 24 of the Act. The Tribunal also observed that the provisional attachment of property is a measure to protect and preserve the proceeds of crime until the guilt or innocence of the person is established, as held by higher courts.Order:The Tribunal concluded that there were no grounds to interfere with the order of the AA. Accordingly, all appeals were dismissed, and the order of the AA was upheld. No order as to costs was made.