If no “money” is recovered from the accused in “money laundering” offences, can the Prevention of Money Laundering Act still hold ground?
The Enforcement Directorate is ready to read the riot act to the Aam Aadmi Party which has argued that no "tainted" money, linked to the alleged Delhi liquor policy scam, has been found from its top leaders, including Delhi Chief Minister Arvind Kejriwal and his deputy Manish Sisodia, despite searches at their residences and scanning of bank accounts.
The ED is examining the matter legally as AAP leadership has accused the agency of “lack of evidence’’. According to ED sources, it isn’t necessary for the proceeds of crime to be found every time in an offence of money laundering, as often, the accused launder money which goes untraceable. In such cases, an amount equivalent to the proceeds of crime generated from the offence of money laundering can be attached from the possession of the accused.
There are four ways in which proceeds of crime under PMLA can be identified. When cash is found on the accused; when the laundered amount is parked outside the country; when it is spent and when it is invested. In cases where the money laundered is recovered in cash from the accused or the amount spent is recovered during investigations, then it is declared as proceeds of crime.
However, in cases of money laundering where the amount cannot be recovered immediately, an equivalent amount is confiscated and attached as proceeds of crime.
Sources said in exceptional cases where the investigating agency suspects that the accused will put hurdles in the confiscation of proceeds of crime, then the agency can seize the properties under section 5 of PMLA.
Section 5 of PMLA states that the officer who provisionally attaches any property as proceeds of crime can file a complaint within 30 days stating the facts of such attachment before the adjudicating authority.
The wide canvas of PMLA, therefore, does not limit itself to a simple recovery of cash or assets, said sources, but lends itself to unravelling criminal conspiracies hidden behind complex financial trails. It is under this gamut of the law that the ED is probing its wide array of cases against AAP.
Such steps have mostly been taken by the ED in the past in cases against business tycoons and companies where recoveries of proceeds of crime were difficult. For example, assets worth nearly Rs 15,000 crore were confiscated and restituted to public sector banks by the ED after attaching properties of PMLA accused such as liquor baron Vijay Mallya and diamantaire Nirav Modi and Mehul Choksi.
In the peculiar case of AAP, the ED is positioning its case on two main points– firstly that the accused were allegedly involved in the “act” of money laundering, and secondly, if proceeds of crime have to be presented as evidence in court, it will have no option but to attach the properties of the accused in the exact amount of the “money” that was laundered.
The AAP might be between a rock and a hard place as the ED pegs the amount at more than Rs 100 crore.
While the ED has told the court it is reluctant to attach the properties of AAP due to potential backlash during the election season, ED sources said if the agency is asked to present the proceeds of crime in court, it may be constrained to present the “evidence” as it has done in other cases in the past.
But before tracing the proceeds of crime, what is interesting to watch is whether the ED’s claim detailing the role of AAP as a “company”, liable of offence of money laundering under section 70 of the PMLA stands the test of judicial scrutiny. The ED has claimed that Kejriwal, as the national convenor of AAP, can be held responsible under section 70 of PMLA for his role in money laundering by the “company’’ ie. AAP, and its conduct of business.
As per investigations so far, the proceeds of crime of about Rs 45 crore was part of bribes received from the South Group which was allegedly used in the election campaign of AAP in Goa in 2021-22. The ED has alleged that “kickbacks were received by top leaders of AAP (especially Kejriwal) from various stakeholders,” including Rs 100 crore from the South Group, “in exchange of favourable outcomes (policy changes) in the excise policy of 2021-22 which was being drafted at that time”.
The AAP, meanwhile, has decried the ED’s move to label it as a “company” saying that it is a registered political party under the Representation of People Act, and challenged the arrest of its top leader saying “no money found”.
Both the claims and counterclaims now rest on the interpretation of the various provisions of the PMLA.
