PMLA search and freezing safeguards: seizure of a financed car and business bank account was held unsustainable without nexus to proceeds of crime.

Section 17 of the Prevention of Money Laundering Act requires an authorised officer to record reasons to believe, follow the prescribed search, seizure and freezing procedure, and forward the recorded reasons and material to the Adjudicating Authority. The Orissa HC noted that no nexus was established between the petitioner-company, its BMW car or its bank account and the alleged proceeds of crime, and the record did not show compliance with the statutory safeguards. As the car was financed and the account reflected business funds, the seizure and freezing were treated as mechanical and without authority of law. The seizure and freezing were held illegal and unsustainable, and relief was granted.

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Issues: Whether the seizure of the petitioner-company's BMW car and the freezing of its bank account under Section 17 of the Prevention of Money Laundering Act, 2002 were lawful in the absence of any established nexus between the petitioner-company and the alleged proceeds of crime, and whether the statutory procedure for search, seizure and freezing had been followed.

Analysis: The petitioner-company was found to have no demonstrated link with the person alleged to be involved in money laundering, and no material was placed to connect the seized car or the frozen account with proceeds of crime. The car was shown to have been purchased on finance, and the bank account contained business funds, yet the Enforcement Directorate did not establish a nexus between those assets and the alleged offences. The statutory scheme under Section 17 requires the authorised officer to form and record a reason to believe, act in accordance with the prescribed procedure, and forward the recorded reasons and material to the Adjudicating Authority. The record did not show compliance with these safeguards, and the seizure and freezing were treated as mechanical and unsupported by authority of law.

Conclusion: The seizure of the BMW car and the freezing of the petitioner-company's bank account were held to be illegal and unsustainable, and the relief sought by the petitioner was granted.

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