The Delhi High Court (HC) on Monday, November 24, ruled that money obtained from cricket betting through forgery, cheating and conspiracy can be registered by the Enforcement Directorate (ED) as “proceeds of crime” under Section 2(1)(u) of the Prevention of Money Laundering Act, 2002 (PMLA). The court also observed that the ED can attack assets generated by illegal betting even though hard cricket betting is not a scheduled offense under the PMLA.
The decision was taken by Justices Anil Kshetarpal and Harish Vaidyanathan Shankar of the Delhi HC bench.
The HC has clarified that if someone obtains immovable property by forgery, fraud or criminal conspiracy and then uses it and then uses it for any “subsequent activity”, any profit derived from the subsequent use of that property can be blocked as “proceeds of crime” if any such activity is traced to the original damaged property.
“This is because the taint attached to the property at its inception, arising from the criminal activity connected with the scheduled crime, persists throughout its subsequent use,” the Bar and Bench court quoted.
He further stated: “It is also important to note that even if the downstream activity, such as betting, is not a planned crime, the profits generated from such activity remain traceable to the original tainted property, especially when said downstream activity is the final manifestation of a chain of criminality that is intricately linked to many preceding crimes, any profit arising from it clearly forms the ‘contours of LAPM’.”
“With regard to the application of Section 2(1)(u) of the PMLA, it is appropriate to note that the scope of this provision is broad and includes not only the immediate profits of the crime, but also any benefit arising from the use, transfer or subsequent use of property obtained from a planned crime.
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The court was hearing a petition filed by some individuals challenging the ED’s issuance of interim orders of attachment (POA). The case stems from the ED’s probe into a large hawala network linked to an international betting syndicate that was allegedly operated through the British platform Betfair.com.
The court also held that “the PAO also indicates the existence of a clear connection between the material collected and the conclusion drawn”.
In May, the agency raided the headquarters of one of the accused, who acted as a middleman, accused of procuring and distributing Super Master IDs – allowing many betting accounts to be created without any KYC checks. The defendant allegedly procured them from ₹2.4 billion each.
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According to B&B, the money to buy Master ID was illegally transferred abroad, enabling betting networks in India, Dubai, Pakistan and other countries.
ED claimed that the group created ₹2400 crores in betting turnover. The money was recovered between December 2014 and March 2015. The ED has attached movable and immovable property believed to be proceeds of crime.
That’s when petitions were filed challenging the attachment of the property. The court rejected the motions and upheld the attachment of the ED properties.
