FINANCIAL INTELLIGENCE UNIT - IND Vs. KOTAK MAHINDRA BANK

JUDGEMENT

(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, the Appellate Tribunal has set aside the order dated 04.09.2015 passed by FIU imposing a penalty of Rs. 3 lakhs on the respondent (known as 'ING Vysya Bank Limited' at the material time), on account of its failure to report attempted suspicious transactions, as required under the Prevention of Money Laundering (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 the failure on part of the respondent bank to comply with the reporting obligations in respect of certain other transactions.