India: Attachment Of Properties In Foreign Jurisdiction Under PMLA

Last Updated: 19 June 2019
Article by Vijay Pal Dalmia, Partner and Satyam Sharma

Article by Vijay Pal Dalmia, Advocate, Supreme Court of India and Delhi High Court, Partner & Head of Intellectual Property Laws Division, Vaish Associates Advocates, India

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Attachment of Property under Prevention of Money Laundering Act (hereinafter, PMLA) is covered u/s 5 of the Act. Relevant portion of S. 5 of PMLA has been produced under:

1) Where the Director or any other officer not below the rank of Deputy Director authorized by the Director for the purposes of this section,

  • has reason to believe
    1. (the reason for such belief to be recorded in writing),
  • on the basis of material in his possession, that:

a) any person is in possession of any proceeds of crime;

b) any such proceeds of crime are likely to be

  • concealed,
  • transferred or
  • dealt with in any manner
    • which may result in frustrating any proceedings relating to confiscation of such proceeds of crime under this Chapter,

he may, by order in writing, provisionally attach such property for a period not exceeding one hundred and eighty days from the date of the order, in such manner as may be prescribed:

Provided that no such order of attachment shall be made unless, in relation to the scheduled offence,

  • a report has been forwarded to a Magistrate under section 173 of the Code of Criminal Procedure, 1973(2 of 1974), or
  • a complaint has been filed by a person authorized to investigate the offence mentioned in that Schedule, before a Magistrate or court for taking cognizance of the scheduled offence, as the case may be, or
  • a similar report or complaint has been made or filed under the corresponding law of any other country:

Provided further that, notwithstanding anything contained in first proviso, any property of any person may be attached under this section if the Director or any other officer not below the rank of Deputy Director authorized by him for the purposes of this section

  • has reason to believe (the reasons for such belief to be recorded in writing),
  • on the basis of material in his possession,
    • that if such property involved in money-laundering is not attached immediately under this Chapter,
    • the non-attachment of the property is likely to frustrate any proceeding under this Act.

Provided also that for the purposes of computing the period of one hundred and eighty days, the period during which the proceedings under this section is stayed by the High Court, shall be excluded and a further period not exceeding thirty days from the date of order of vacation of such stay order shall be counted.

To understand whether attachment of properties located in foreign jurisdiction is permissible or not it is necessary to understand the definition of proceeds of crime under PMLA. The expression "proceeds of crime" has been defined under Section 2(1) (u) of PMLA as under:

"Section 2(1) (u) - "proceeds of crime" means

  • any property
    • derived or
    • obtained,
      • directly, or indirectly,
  • by any person
    • as a result of criminal activity
    • relating to a scheduled offence or
      • the value of any such property or
        • where such property is taken or held outside the country,
          • then the property equivalent in value held within the country or abroad"

Accordingly, the Enforcement Directorate (hereinafter, ED) can attach a property u/s 5 of PMLA in a foreign jurisdiction if it is derived or obtained directly or indirectly as a result of criminal activity relating to a scheduled offence.

The scope of S. 2(1)(u) of PMLA was further expanded by the Finance Act, 2018. According to this amendment the ED can now alternatively attach property equivalent in value abroad as well in case the proceeds of crime have been taken or held outside the country. This equivalent property would also fall under the purview of 'proceeds of crime' and the ED would have jurisdiction over it although they might have come into existence much before the commission of the scheduled offence or the enforcement of the act.[1] This amendment not only makes S. 2(1)(u) much better suited keeping in mind the current situation of the offenders under PMLA but also gives more teeth to the act. It helps the ED deal with those cases as well where the proceeds of crime cannot be traced or the proceeds have been altogether dissolved rather than making the provisions of attachment and confiscation under PMLA futile since the proceeds of crime cannot be pinpointed.

given, in case the total value involved in the offence is more than one hundred Crores the Fugitive Economic Offenders Act, 2018 (hereinafter, FEOA) can also be a recourse to attach a property in a foreign jurisdiction.

FEOA includes an offence of money laundering u/s 3 and 4 of PMLA under its schedule and the proceeds of crime held outside the country can be attached directly using it. Under FEOA attachment of proceeds of crime held or taken outside India u/s 5 can be done for any property mentioned u/s 4 (i.e. application for declaration of fugitive economic offender) which includes a property outside India for which confiscation is sought. This attachment can also be done in case an application is not filed u/s 4 using S. 5(2) of FEOA provided that the Director or any other officer who provisionally attaches any property under this sub-section shall, within a period of thirty days from the date of such attachment, file an application u/s 4 before the Special Court.

To attach any property that is located outside India a 'Letter Rogatory' is sent to the respective nation issued by the ED after taking prior permission from a special court. Letter Rogatory's are formal requests sent to a competent authority in a country outside India seeking judicial assistance in investigation. Once the competent authority of the foreign country receives this request they start the procedure to attach the property that falls under their jurisdiction depending on the material that has been provided to them.

Consequently, the provisions for attachment under the PMLA are not hindered due to the property being present in a foreign jurisdiction. PMLA covers both attachment of property obtained using tainted money directly as well as the alternate attachment of property to secure the value of the original tainted property irrespective of whether this alternate property is located in India or Abroad.


[1] Abdullah Ali Balsharaf and Ors. v. Directorate of Enforcement, 2019 SCC OnLine Del 6428

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