FATF plays big role in attaching Nirav Modi's foreign properties

nirav-modi-properties Two immovable properties having a total value of USD 29.99 million (Rs 216 crore approx) and beneficially owned by Nirav Modi in New York have been attached under Section 5 of the Prevention of Money Laundering Act. [Inset: Nirav Modi]

The Financial Action Task Force (FATF), the global watchdog on money laundering, has put pressure on countries to cooperate in crimes related to financial frauds. Recently, the FATF has helped the Enforcement Directorate (ED) attach assets worth rupees thousands of crores of fugitive diamond billionaire Nirav Modi. Nirav modi and his uncle Mehul Choksi are accused in the mult-crore Punjab National Bank scam unearthed in January this year.

Sources in the ED said that countries like the United States, the United Kingdom and Singapore, among others, who are members of the FATF, played a big role in enabling the ED to lay its hands on the stolen funds parked in these countries.

The ED on Monday attached properties owned by Nirav Modi in foreign countries, purchased using the stolen funds. This included jewellery worth Rs 22.7 crore parked in Hong Kong, which was later shipped back to India.

The ED has approached its counterparts in foreign countries by sending judicial requests in the form of Letter Rogatory (LR) since India has a Mutual Legal Assistance Treaty (MLAT) with these countries. The LR is a letter of request from an Indian agency sent through a domestic court to a foreign court.

“The international community has become more aware and no country wants to be seen lapsing in efforts to maintain financial credibility. The LRs are honoured and here the role being played by the FATF is important as an inter-governmental anti-money laundering body since it is keeping a tight watch on financial frauds and prodding countries to cooperate against financial crimes cutting across geographical boundaries,” said a senior official.

There are three ways through which a country’s investigating agency can get proceeds of crime stashed away in a foreign country. One way is through the MLAT and dispatching LRs. In the second scenario, where a country is not a part of any legal assistance treaty on criminal financial matters, international conventions play a big role. If a country is a signatory to any international convention which demands certain steps to be taken by that country in the related matters, that country has to entertain the requests of countries seeking assistance.

The third way is “reciprocity”. Any country seeking cooperation of another country in an investigation in the absence of any treaties or conventions can be assured of reciprocity in future. This can be applied to cases of financial frauds as well.

The ED has all options on their table to convince those countries where ill-gotten wealth has been parked by the fugitive economic offenders in the PNB scam. So far, the ED has sent formal requests seeking assistance from nearly 13 countries like Dubai, Belgium, Singapore, Russia, France, China and Hong Kong besides, the US and the UK to claim the assets of the absconders.