Provisional attachment under PMLA can reach non-accused persons, and core lending outsourcing may form part of a money-laundering chain.

Fintech entities and NBFCs that, under service agreements and actual operating control, handled customer identification, due diligence, loan processing, recovery, data management and customer interaction were treated as having outsourced core lending functions rather than providing mere ancillary support, and the arrangement was found to amount in substance to misuse of the NBFC framework and to be linked with proceeds of crime. The Tribunal also held that provisional attachment under the Prevention of Money Laundering Act, 2002 is not limited to persons named as accused in the FIR or chargesheet and may extend to any person in possession of proceeds of crime. On both grounds, the attachment was sustained and the appeals failed.

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Issues: (i) Whether the fintech companies and NBFCs, on the basis of the service agreements and the actual manner of operation, had outsourced core lending functions in violation of RBI norms and were involved in the generation and laundering of proceeds of crime. (ii) Whether provisional attachment under the Prevention of Money Laundering Act, 2002 could be sustained against appellants not named as accused in the FIRs or chargesheets.

Issue (i): Whether the fintech companies and NBFCs, on the basis of the service agreements and the actual manner of operation, had outsourced core lending functions in violation of RBI norms and were involved in the generation and laundering of proceeds of crime.

Analysis: The agreements placed before the Tribunal showed that the fintech entities were not confined to ancillary support but were entrusted with app development, customer identification, due diligence, loan processing, collection, recovery, data handling, and customer interaction. The lending model was found to operate through mobile applications under the effective control of the fintech entities, with deductions of substantial processing charges, excessive interest, and coercive recovery practices. On the material available, the arrangement was treated as an outsourcing of core lending activity in substance, not merely a facilitative service arrangement, and the Tribunal declined to accept the plea that the fintech role was limited or innocuous.

Conclusion: The challenge on this issue failed and the Tribunal held the arrangement to be a misuse of the NBFC framework and connected with proceeds of crime, against the appellants.

Issue (ii): Whether provisional attachment under the Prevention of Money Laundering Act, 2002 could be sustained against appellants not named as accused in the FIRs or chargesheets.

Analysis: The Tribunal applied the statutory scheme of attachment and the principle that the power under the Act extends to any person in possession of proceeds of crime. It relied on the breadth of the definition of proceeds of crime and the continuing nature of money-laundering, together with the authoritative construction that provisional attachment is not confined to persons named as accused in the scheduled offence. On that basis, the absence of the appellants' names in the FIRs or chargesheets was held to be immaterial for sustaining attachment.

Conclusion: The objection was rejected and the attachment was upheld against the appellants.

Final Conclusion: The Tribunal upheld the impugned attachment order and rejected the appeals in their entirety.

Ratio Decidendi: Provisional attachment under the Prevention of Money Laundering Act, 2002 is not confined to persons named as accused in the scheduled offence and may be made against any person in possession of proceeds of crime; an outsourcing arrangement that in substance transfers core lending and recovery functions to fintech entities may be treated as part of the money-laundering chain when the factual matrix so shows.

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