TMI Blog2019 (9) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... tems put in place by the respondent bank for compliance with its reporting obligations. Thus, there is merit in the respondent s claim that the letter dated 18.09.2014 had closed the entire matter by the issuance of a warning - Having issued a warning to the respondent and the respondent having accepted the same, there was no occasion for the FIU to pass the order dated 04.09.2015. Appeal dismissed. - CRL.A.177/2018 & CRL.M.A. 2794/2018 & 2796/2018 - - - Dated:- 3-9-2019 - MR VIBHU BAKHRU J. Advocates who appeared in this case: For the Appellant: Mr. Satish Aggarwala, Advocate. For the Respondent: Ms. Jagriti Ahuja, Mr. Ateev Mathur and Mr. Amol Sharma, Advocates . JUDGMENT VIBHU BAKHRU, J 1. The Financial Intelligence Unit - Ind, Department of Revenue, Ministry of Finance (appellant hereafter FIU ) has filed the present appeal, under Section 42 of the Prevention of Money Laundering Act, 2002 (hereafter PMLA ), impugning an order dated 28.06.2017 (hereafter the impugned order ) passed by the Appellate Tribunal, Prevention of Money Laundering Act (hereafter the Appellate Tribunal ). By the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain officials/employees of the respondent bank and conveyed their interest to launder large amounts of black money belonging to a minister . The conversations of the journalists and the officials of the banks were recorded. The conversations, inter alia, related to opening of the accounts for depositing monies and for laundering the same by investing it in insurance schemes. The conversation also included the undercover reporters evincing their intention to hire lockers for storing currency. It is alleged that the conversations clearly indicate that the bank officials of the respondent bank were willing to be a party to and facilitate such transactions. The said conversations which the FIU has held to be suspicious transactions within the meaning of Rule 2(g) of the Rules were not reported. The FIU has held that not reporting such transactions constitutes violation of the respondent bank s reporting obligations under the Rules. 5.2 The sting operation was given due publicity by Cobrapost. This was taken note of by the FIU. And, on 10.07.2013, the Deputy Director, FIU sent a letter calling upon the respondent to provide certain information including the details of rol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certain inquiries were made and no concrete act was committed or admitted by any of the individuals and therefore, the respondent bank did not deem it necessary to file STRs in respect of the enquiries made by the undercover reporters of Cobrapost. 5.7 In response to the respondent bank s request for a personal hearing, the FIU sent a letter dated 25.03.2014 acceding to the request and scheduling a hearing on 15.04.2014. 5.8 Thereafter, on 15.04.2014, a personal hearing was granted to the respondent bank. During the course of hearing, certain queries were raised and the respondent bank responded to the said queries by a letter dated 28.04.2014. 5.9 Thereafter, on 18.09.2014, the FIU issued a letter advising the respondent bank to be more vigilant and exercise caution in future by making the necessary modifications in strengthening PMLA related procedures. The respondent bank was also warned that in the event of reoccurrence of lapses, the FIU would be constrained to initiate complaint proceedings against the respondent bank and the persons responsible, in accordance with Section 13 of the PMLA. 5.10 Almost a year thereafter, the Director, FIU pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt responded to the same and had provided the information as sought. Thereafter, the FIU had issued a show cause notice alleging contravention of Section 12(b) of the PMLA, read with the Rules. Concededly, the said show cause notice was issued in respect of suspicious transaction as reported by Cobrapost. The said show cause notice was followed by another letter dated 03.02.2014 sent by the FIU. This letter was also in reference to the sting operation by Cobrapost as is evident from the fact that the subject of the letter expressly indicated so. Further, the said letter was issued in reference to the earlier letter dated 10.07.2013 issued by the FIU and the respondent s response thereto. Thus, there could be no doubt that this letter was also in connection with the controversy regarding alleged violation of Section 12 of the PMLA on account of nonreporting of the suspicious transactions, which were the subject matter of the sting operation by Cobrapost. 12. Thereafter, the respondent bank was afforded a personal hearing on 15.04.2014. Concededly, this hearing was also in respect of the Cobrapost sting operation. This is also clear from the notice dated 25.03.2014, fixing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he sting operation conducted by Cobrapost. It is clear from the communications that the sting operation conducted by Cobrapost had set in motion an inquiry by the FIU which was not only limited to non-reporting of the transactions, which were subject matter of the sting operation, but also an extensive examination into the internal control system and anti-money laundering procedures established for compliance of the statutory obligations by the respondent. Given the manner in which the inquiry was conducted, there is no scope for separating the allegation relating to non-reporting of transactions, which were subject matter of the sting operation and the systems put in place by the respondent bank for compliance with its reporting obligations. Thus, there is merit in the respondent s claim that the letter dated 18.09.2014 had closed the entire matter by the issuance of a warning. 17. In this view, this Court finds no infirmity with the decision of the Appellate Tribunal holding that the order dated 04.09.2015 was an afterthought and had been issued much after the FIU had closed the proceedings by issuing a warning letter. Having issued a warning to the respondent and the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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