Provisional attachment upheld where prima facie evidence links property to proceeds of crime via placement, layering and conversion into gold.

Whether provisional attachment of immovable property is sustainable where investigation material gives reason to believe the property represents proceeds or equivalent value of money laundering; the note applies the statutory "reason to believe" test and finds that witness statements, CCTV, bank transaction trails, inter-account transfers, RTGS payments to bullion dealers, and admissions establish a prima facie pattern of placement, layering and integration by conversion of demonetized currency into gold. Operatively, the available prima facie material supports confirmation of the provisional attachment and dismissal of the appeal.

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Issues: Whether the Provisional Attachment Order dated 06.10.2017 and the Impugned Order dated 26.03.2018 confirming attachment of immovable property of the appellant can be sustained on the ground that the property is involved in or represents the value/equivalent of proceeds of crime arising from alleged conversion of demonetized currency into gold/bullion.

Analysis: The proceedings arise from recovery of large quantities of demonetized currency and subsequent investigation under the Prevention of Money Laundering Act, 2002. Investigation material includes statements recorded under Section 50 of the Prevention of Money Laundering Act, 2002, CCTV evidence, bank transaction trails showing deposits into accounts of alleged shell entities, inter-account transfers, RTGS payments to bullion traders, and admissions by the appellant regarding collection of demonetized currency and purchase/sale of gold. The statutory test for provisional attachment requires a "reason to believe" that property is involved in money laundering or represents the value/equivalent of proceeds of crime. The material on record discloses a pattern of collection of demonetized currency, placement through front/shell entities, layering by inter-account transfers, and integration by conversion into gold at a premium. The statements and corroborative material supply a prima facie basis to connect the appellant to the alleged process and activity connected with proceeds of crime within the meaning of Section 3 of the Prevention of Money Laundering Act, 2002. Attachment is not limited to properties directly acquired from proceeds of crime but extends to equivalent value; at the provisional stage the respondent need only demonstrate reason to believe, which the investigation material supplies.

Conclusion: The Provisional Attachment Order and the Impugned Order confirming attachment are sustainable on the available prima facie material; the appeal is dismissed and the attachment stands confirmed in favour of the Respondent.

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