2009 (11) TMI 1009 - AT - Money Laundering

Summary

Issues Involved:
1. Validity of Provisional Attachment Orders
2. Establishment of Link/Nexus Between Attached Properties and Proceeds of Crime
3. Requirement of Being Charged with a Scheduled Offence for Provisional Attachment
4. Burden of Proof Regarding Legitimate Sources of Funds

Detailed Analysis:

1. Validity of Provisional Attachment Orders:
The appeals challenge the orders of the Adjudicating Authority confirming provisional attachments under Section 5 of the Prevention of Money Laundering Act, 2002. The appellants argued that the orders were based on assumptions and lacked concrete evidence linking the attached properties to proceeds of crime. The Tribunal found that the provisional attachment orders were valid, as there was sufficient material to form a reason to believe that the remittances in the NRE account of Shri R.P. Modani were proceeds of crime.

2. Establishment of Link/Nexus Between Attached Properties and Proceeds of Crime:
The appellants contended that no link or nexus had been established between the attached properties and the proceeds of crime. The Tribunal noted that the funds remitted into the NRE account of Shri R.P. Modani were from M/s. Royal Global Exports Pte. Ltd., Singapore, and on a self-basis from Singapore, with no commercial or economic reasons. The Tribunal found that the properties attached were indeed proceeds of crime, considering the interconnected transactions and the lack of legitimate business reasons for the remittances.

3. Requirement of Being Charged with a Scheduled Offence for Provisional Attachment:
The appellants argued that they had not been charged with a scheduled offence, which is a sine qua non for initiating provisional attachment proceedings under Section 5 of the Act. The Tribunal held that it is not necessary for the person in possession of the property involved in money laundering to be charged with a scheduled offence. The Tribunal referred to the legislative intent and the purpose of the Act, concluding that properties derived from criminal activities related to a scheduled offence could be attached even if the person in possession was not charged with the scheduled offence.

4. Burden of Proof Regarding Legitimate Sources of Funds:
The appellants claimed that the money received was from legitimate sources and was gifted through authorized banking channels. The Tribunal emphasized that Section 24 of the Act places the burden of proof on the accused to show that the proceeds of crime are untainted property. The appellants failed to provide satisfactory evidence or documentation to prove the legitimate sources of the funds deposited in the NRE account of Shri R.P. Modani. The Tribunal noted that the appellants did not discharge their burden of proof, and the remittances were presumed to be proceeds of crime.

Conclusion:
The Tribunal upheld the orders of the Adjudicating Authority confirming the provisional attachment of properties. The appeals were dismissed, with the Tribunal concluding that the properties held in the names of the appellants were proceeds of crime and involved in money laundering, thus warranting attachment under the Act.