2026 (3) TMI 1534 - AT - Money Laundering

Money-laundering attachment can stand without FIR naming if possession of proceeds of crime is shown and source of funds remains unexplained.

Provisional attachment under money-laundering law can be sustained against a person not named in the FIR or charge-sheet if material shows possession or ... Money Laundering - Validity of the provisional attachment even though the appellants were not named as accused in the FIR or charge-sheet - Burden to prove - lawful source for the remittances and property purchases - non-submission of any documentary evidence about the source of income in respect of more than Rs. 10.00 Crore sent through banking channels from Dubai and its subsequent investment in the properties gives to reasonable belief that the money used for purchase of the property - Proceeds of crime - Equivalent value attachment - relevance of SMS, data extracted by the CFSL from the mobile handsets. Attachment of property held by non-accused persons - Proceeds of crime - HELD THAT: - The Tribunal held that provisional attachment under the 2002 Act is not confined to persons named as accused in the FIR or chargesheet. The determinative test is whether the property is linked to proceeds of crime and whether the person concerned is involved in holding or receiving such proceeds. Since the case of the respondent was that the appellants were recipients of the crime money, the objection founded solely on their non-inclusion as accused in the predicate offence was rejected. [Paras 20, 22] The challenge to attachment on the ground that the appellants were not accused in the scheduled offence was rejected. Burden to prove lawful source of funds - Equivalent value attachment - Proceeds of crime - HELD THAT:- It was necessary to prove the source of sum of Rs. 10 crores for his transmission to India which appellant utterly failed and therefore the argument that the transfer of the amount was out of the income cannot be accepted. The Tribunal found that the appellants rested their case on assertions that the remitted funds were business earnings of Lawrence Paul from Dubai, but produced no documentary material to substantiate such earnings or the source of the large remittances and cash components used for acquisition of the properties. The Tribunal further held that the contemporaneous SMS reference and purchase of property on the same day could not be treated as a mere coincidence. On that basis, and in the absence of proof of legitimate source, the explanation of lawful remittance was not accepted. The contention that some properties had been acquired prior to the date of the murder was also rejected, the Tribunal holding that the money trail was connected with the criminal activity and, in any event, property of equivalent value could be attached within the meaning of proceeds of crime. [Paras 25, 26, 27, 29, 30] The Tribunal upheld the attachment, holding that the appellants had failed to prove lawful source of funds and that the plea based on prior acquisition of some properties did not defeat attachment. Final Conclusion: The Tribunal found no infirmity in the confirmation of the provisional attachment. Holding that the appellants could be proceeded against as recipients of proceeds of crime and that they had failed to prove any lawful source for the funds used for acquisition of the properties, the appeals were dismissed. Issues: (i) Whether provisional attachment could be sustained even though the appellants were not named as accused in the FIR or charge-sheet. (ii) Whether the appellants established a lawful source for the remittances and property purchases, so as to displace the finding that the attached properties represented proceeds of crime.Issue (i): Whether provisional attachment could be sustained even though the appellants were not named as accused in the FIR or charge-sheet.Analysis: The legal position applied was that attachment under the money-laundering law is not confined to persons arraigned in the scheduled offence. The decisive question is whether the person is in possession of proceeds of crime or has received property connected with such proceeds. A person may be proceeded against if the material indicates possession or receipt of tainted property, even without being an accused in the predicate case.Conclusion: The objection based on non-impleadment as an accused was rejected and the attachment was held sustainable against the appellants.Issue (ii): Whether the appellants established a lawful source for the remittances and property purchases, so as to displace the finding that the attached properties represented proceeds of crime.Analysis: The explanations regarding the alleged earnings in Dubai and the transfer of large sums to India were not supported by documentary proof such as bank statements or reliable accounts. The contemporaneous SMS trail, the unexplained cash component, the timing of purchases, and the failure to prove the source of funds led to the inference that the assets were acquired from tainted funds and projected as untainted property. The tribunal also treated properties acquired around the relevant period as liable to attachment where their value was linked to the proceeds of crime or its equivalent value.Conclusion: The source of funds was not proved and the finding that the properties were proceeds of crime was upheld.Final Conclusion: The attachment order and its confirmation were sustained, and the appeals were dismissed.Ratio Decidendi: For provisional attachment under the money-laundering law, it is sufficient if material shows possession or receipt of proceeds of crime; formal accusation in the scheduled offence is not necessary, and unexplained assets traced to tainted funds or their equivalent value are liable to attachment.