Section 12(1)(b) of the Prevention of Money Laundering Act, 2002 ...

Bank penalized for delayed reporting of high-value cash transactions violating anti-money laundering laws.

Case Laws     Money Laundering

November 19, 2024

Section 12(1)(b) of the Prevention of Money Laundering Act, 2002 requires reporting entities to furnish information about transactions referred to in Section 12(1)(a) to the Director, FIU-IND within the prescribed time. The appellant bank failed to report or delayed reporting cash transactions of high value, violating Section 12(1)(b) read with Rules 3(1)(A), 3(1)(B), 7(2), and 7(4) of the 2005 Rules. The penalty of Rs. 25,70,000/- was imposed for this violation. The Tribunal held that the phrase "each failure" in Section 13 refers to failure or delay in furnishing information for each transaction, attracting penalty. Ignoring contraventions would undermine the Act's sanctity and compliance. The appellant admitted inadvertent error, but penalty was rightly imposed as per the Supreme Court's judgment in Shriram Mutual Fund case. The minimum penalty of Rs. 10,000/- was imposed for 167 defaults, while Rs. 50,000/- was imposed for 16 CTRs. The penalty cannot be considered disproportionate given the bank's continuous contravention and delayed reporting only after RBI's notification. The appeal was dismissed as lacking merit.

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