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TMI Blog2019 (9) TMI 429X X X X Extracts X X X X X X X X Extracts X X X X ..... ing (Maintenance of Records) Rules, 2005 (hereafter 'the Rules'). 2. Although the Appellate Tribunal rejected the respondent's contention that there was no suspicious transaction as defined under Rule 2(g) of the Rules; it accepted the contention that the matter relating to the alleged violation stood closed by the issuance of a warning by the FIU in terms of its letter dated 18.09.2014. The Appellate Tribunal held that the matter having been closed with a direction to be vigilant, there was no occasion for the FIU to, thereafter, impose any fine. It held that the order dated 04.09.2015 was an afterthought and accordingly, set aside the said order. 3. The appellant contends that the FIU's letter dated 18.09.2014, issuing a warning and calling upon the respondent to be vigilant in future, did not relate to the failure of the respondent bank to report suspicious transactions, which were the subject of a sting operation conducted by journalists working for a media portal - cobrapost.com (hereafter 'Cobrapost'). It is contended on behalf of the appellant that the Appellate Tribunal has grossly erred in not appreciating that the warning letter dated 18.09.2014 was issued on account of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted the alerts as finalized by the International Bar Association (IBA) working group, in its Anti-Money Laundering (AML) system. In response to the said query, the respondent bank communicated that it had initiated the implementation of eighty-eight alert indicators as provided in the IBA Guidelines issued in March, 2012. The FIU also called upon the respondent bank to give details as to the Suspicious Transaction Reports (STRs) submitted in relation to the sting operation. 5.4 Thereafter, on 27.01.2014, the FIU issued a show cause notice under Section 13 of the PMLA alleging non-compliance of the provisions of Section 12 of the PMLA. It is alleged that STRs in relation to the attempted transaction, as reported by Cobrapost, amounted to violation of Section 12(b) of the PMLA, read with the Rules. 5.5 The said show cause notice was followed by a letter dated 03.02.2014, whereby the respondent bank was called upon to furnish further analysis. It is clear that the said letter was in connection with the matter relating to the sting operation conducted by Cobrapost, as the subject of the said letter expressly indicated as such. 5.6 The respondent bank responded to the letter dated 03 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... art of the respondent bank to file STRs covering seventy-nine transactions in the year 2012-13, within time. He submitted that the said letter had no connection with the matter relating to the sting operation conducted by Cobrapost. He submitted that a reference to the sting operation by Cobrapost, as the subject of the said letter, was an inadvertent mistake. 7. Next, he contended that the said letter was not issued by the Director, FIU but by the Additional Director, who was not authorized to pass any such order under Section 13 of the PMLA as the said powers were vested only with the Director, FIU. 8. Ms Jagriti Ahuja, learned counsel appearing for the respondent bank countered the aforesaid submissions. Reasons and Conclusion 9. At the outset, it is important to note that all communications as noticed above bear a reference to the file numbered as F25-1/2013-FIU-IND. It is apparent from the above that the said communications were relating to a single proceeding and not separate matters, as is contended on behalf of the FIU. 10. As noticed above, the first communication issued by the FIU, after the conversations recorded during sting operation were placed in public domain, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er these guidelines guided the staff to distinguish between an attempted transaction and mere enquiry, a distinction made in the hearing? 3. Whether any alerts had been raised by the staff regarding these incidents to the higher levels, including the Principal Officer? 4. Whether the Bank employees had admitted to the conversation recorded in the Cobrapost's CD? 5. Whether the Banks internal inquiries had found any violation by the concerned staff?" 14. Indisputably, the said questions were raised in connection with the said show cause notice dated 27.01.2014, as the personal hearing was granted in respect of the said notice. The respondent bank had, by a letter dated 28.04.2014, forwarded its response to the questions as set out above. 15. The FIU had, thereafter, issued a letter dated 18.09.2014, issuing a warning to the respondent bank and directing it to be vigilant in future. It is relevant to note that the letter dated 18.09.2014 also referred to the respondent's letter dated 21.02.2014. As noticed above, the letter dated 21.02.2014 had been sent by the respondent bank in response to the queries raised by the FIU by its letter dated 03.02.2014. The said letter dated 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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