Home Case Index All Cases Money Laundering Money Laundering + HC Money Laundering - 2019 (9) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (9) TMI 430 - HC - Money LaunderingMoney Laundering - sting operation - Reduction in quantum of penalty - Violation of the reporting obligations on part of the respondent banks - issuance of a warning in writing under Section 13(2)(a) of the Act - whether the Appellate Tribunal could modify the order passed by the Director, FIU by reducing the penalty imposed? - HELD THAT:- It is apparent that FIU’s contention that provisions of Section 13(2) of the Act, as in force prior to amendment on 15.02.2013, are applicable, is bereft of any factual foundation. The said contention is premised on the basis that the sting operation had been conducted prior to 15.02.2013 and, therefore, the respondent banks had violated the provisions of the Act, prior to Section 13(2) of the Act being amended. Consequently, the respondent banks are required to be visited with penalty as provided under Section 13(2) of the Act as in force prior to 15.02.2013. However, since there is no material on record to establish that the sting operation had been conducted prior to 15.02.2013, the aforesaid contention is unfounded. The sub-section (2) of Section 13, as in force prior to 15.02.2013, expressly provided that in case a banking company, financial institution or intermediary or any of its officers fail to comply with the provisions of Section 12 of the Act, then the Director, FIU may by an order, levy fine on such banking companies, financial institution or intermediary which shall not be less than ₹ 10,000/- but may extend to ₹ 1,00,000/- for each failure - Section 13(2) of the Act was substituted by Clause (iii) of Section 11 of the Prevention of Money-Laundering (Amendment) Act, 2012. By virtue of the said amendment, it was no longer necessary for the Director to impose a monetary fine; he was enabled to pass other orders as may be warranted, including issuing a warning in writing or issuing directions for compliance with specific instructions or issuing directions for sending reports as may be prescribed on the measures being taken by the reporting entity. The object of amending Section 13(2) of the Act is clearly to enable the Director, FIU to issue such orders as may be warranted. Under the unamended provision, the Director had no discretion except to levy a fine in cases where failure to comply with the provisions of Section 12 of the Act was established. He, however, had the discretion to determine the quantum of fine within the limits as prescribed. The maximum fine that could be imposed by him was ₹ 1,00,000/- for each failure. The same could be reduced, however; but not less than ₹ 10,000/-. The rigors of the aforesaid provisions have been relaxed by virtue of Section 11(iii) of the Prevention of Money-Laundering (Amendment) Act, 2012. Thus, in cases where only a warning is warranted, it is not necessary for the Director to impose a monetary fine. Even if it is assumed that the sting operation was conducted prior to 15.02.2013, there is no infirmity in the decision of the Appellate Tribunal to modify the punishment from a monetary fine to a warning in writing, in terms of Section 13(2)(a) of the Act as substituted with effect from 15.02.2013 - appeal dismissed.
|