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2019 (9) TMI 429

..... was issued by the FIU in respect of the alleged violation of Section 12 of the PMLA, read with the Rules. The subject matter of the allegations included the internal control systems and failure to submit the STRs in relation to the 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 - Having issued a warning to the respondent and the respondent having acce .....

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..... s in respect of certain other transactions. 4. In view of the above, the limited controversy that falls for consideration of this Court in this appeal is whether the Appellate Tribunal had erred in proceeding on the basis that the letter dated 18.09.2014 was issued by the FIU in respect of failure on the part of the respondent to report suspicious transactions, stated to have been attempted by journalist of Cobrapost, as a part of the sting operation. 5. The above controversy arises in the following factual context: - 5.1 During the period between December, 2012 and February, 2013, reporters from Cobrapost visited three branches of the respondent (then known as ING Vysya Bank Limited ) located in Hyderabad, Chandigarh and Kolkata. The said reporters met certain 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 reporter .....

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..... s transactions as sought for by the FIU. Thereafter, on 26.02.2014, the respondent bank sent a letter in response to the show cause notice dated 27.01.2014. The respondent bank informed the FIU that it had investigated the matter so as to ascertain the facts and veracity of the video recording posted by Cobrapost. It stated that the video had also been subjected to forensic examination by an independent agency and it was confirmed that the video posted by Cobrapost was pre-edited . The respondent bank also stated that the video recording had been edited and extracted by Cobrapost with a mala fide intention to create perception in the minds of the viewers and public at large. The respondent bank contended that only 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 w .....

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..... s relevant to note that the subject of the said communication was stated to be: Sting operation by Cobrapost - Alleged Money Laundering in banks - Reg . Extensive information was sought in terms of the annexure appended to the said communication. This included information as to how many alerts were generated during the period 01.04.2012 to 28.02.2013 on account of specified indicators in the branches involved in the sting operation. Several queries were raised in respect of the assistance and the Anti-Money Laundering (AML) procedures incorporated by the respondent bank in its system. 11. The appellant 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 re .....

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..... ting operation publicized by the Cobrapost. A plain reading of the letter dated 03.02.2014 also clearly indicates that it was issued in respect of the sting operation conducted by Cobrapost. 16. In view of the above, there is no doubt that the warning letter dated 18.09.2014 was issued by the FIU in respect of the alleged violation of Section 12 of the PMLA, read with the Rules. The subject matter of the allegations included the internal control systems and failure to submit the STRs in relation to the 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 respo .....

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