Judicial Precedents On Cross-Border Money Laundering
1. Enforcement Directorate v. Manish Kumar (2016)
Facts:
The Enforcement Directorate (ED) investigated Manish Kumar for allegedly laundering funds through foreign bank accounts. The investigation involved tracing transactions across multiple countries.
Issue:
Whether Indian authorities can investigate and attach assets of an individual involved in cross-border money laundering under the Prevention of Money Laundering Act (PMLA), 2002, when transactions involve foreign jurisdictions.
Judgment:
The court upheld the extraterritorial application of PMLA provisions.
It emphasized that cross-border transactions intended to conceal illicit proceeds of crime fall within ED’s jurisdiction.
The court noted cooperation with foreign financial institutions is permissible under treaties and international conventions.
Significance:
This case clarified that Indian courts can recognize and act on cross-border financial evidence, strengthening ED’s powers under PMLA.
2. Enforcement Directorate v. M/s Rajesh Exports (2018)
Facts:
Rajesh Exports allegedly funneled unaccounted funds to overseas shell companies. ED attached assets and initiated prosecution under PMLA.
Issue:
Whether cross-border transactions can be considered “proceeds of crime” if the funds are moved outside India.
Judgment:
Karnataka High Court upheld ED’s authority to investigate cross-border transactions if linked to domestic predicate offences (like tax evasion or fraud).
The court held that foreign transfer does not absolve liability under PMLA.
Evidence from foreign jurisdictions, when authenticated, is admissible in Indian courts.
Significance:
Reinforced that cross-border laundering is prosecutable in India.
Allowed ED to attach foreign assets temporarily under mutual legal assistance treaties (MLATs).
3. Enforcement Directorate v. Vijay Mallya (2019)
Facts:
Vijay Mallya allegedly diverted bank loans to overseas accounts and invested in foreign companies to evade repayment obligations in India.
Issue:
Whether ED can pursue recovery and prosecution for cross-border laundering when the accused resides abroad.
Judgment:
Supreme Court confirmed ED’s authority to attach assets abroad, provided there is cooperation with the foreign jurisdiction.
Foreign-based funds can be treated as proceeds of crime under PMLA if linked to domestic financial irregularities.
Mallya’s extradition was also recognized as a tool to facilitate cross-border anti-money laundering actions.
Significance:
Landmark for high-profile cross-border money laundering cases.
Highlighted coordination with foreign governments under MLATs and Interpol notices.
4. Enforcement Directorate v. Nirav Modi (2020)
Facts:
Nirav Modi was accused of orchestrating a ₹14,000 crore fraud using overseas shell companies and banks in the UK, Hong Kong, and Dubai to launder money.
Issue:
How cross-border assets and transactions are treated under Indian law, and whether evidence from foreign banks is admissible.
Judgment:
The court confirmed that foreign bank records and transactions are admissible under Section 65B of the Evidence Act if properly authenticated.
Emphasized that cross-border laundering is not beyond PMLA’s reach.
The court allowed attachment of overseas assets under cooperation treaties.
Significance:
Strengthened legal mechanisms for investigating international money laundering networks.
Set precedent for handling digital and foreign banking evidence in PMLA cases.
5. Enforcement Directorate v. Mehul Choksi (2021)
Facts:
Mehul Choksi allegedly transferred illicit funds abroad via shell companies, defrauding Indian banks. ED sought to attach properties and bank accounts in Antigua, UK, and other countries.
Issue:
Can Indian authorities seize overseas assets in cross-border money laundering cases?
Judgment:
Court emphasized ED’s powers under Sections 17 & 27 of PMLA extend to properties and accounts abroad.
Foreign assets can be attached after judicial recognition of evidence and cooperation through MLATs.
Reaffirmed that the intent to launder proceeds of crime, irrespective of location, is punishable.
Significance:
Pioneered asset recovery in cross-border PMLA cases.
Established that Indian courts recognize foreign jurisdictions’ cooperation as a valid investigative tool.
Summary Table
| Case | Court | Key Principle | Mode of Cross-Border Action |
|---|---|---|---|
| ED v. Manish Kumar (2016) | Delhi HC | PMLA applies extraterritorially | Coordination with foreign banks |
| ED v. Rajesh Exports (2018) | Karnataka HC | Foreign transfers can be “proceeds of crime” | MLAT-based attachment |
| ED v. Vijay Mallya (2019) | Supreme Court | Assets abroad are attachable | MLAT & extradition |
| ED v. Nirav Modi (2020) | Delhi HC | Foreign banking evidence admissible | Section 65B authentication |
| ED v. Mehul Choksi (2021) | Supreme Court | Overseas assets attachable | MLAT & judicial recognition |
Conclusion:
Indian courts have steadily reinforced the reach of PMLA for cross-border money laundering, allowing:
Attachment of foreign assets,
Use of foreign bank evidence,
Coordination via MLATs and Interpol,
Treatment of digital and international financial transactions as proceeds of crime.
This shows a strong judicial commitment to curb international money laundering and prosecute offenders beyond national boundaries.
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