New Delhi: The Enforcement Directorate’s handling of five cases found mention in a best global practices report of the Financial Action Task Force (FATF), in what can be seen as an endorsement of restitution of properties to rightful owners after attachment under money laundering proceedings.
In its assessment report released Tuesday, the global anti-money laundering and terror financing watchdog cited restitution of over Rs 500 crore to more than 75,000 victims who had invested in real estate projects of the Rose Valley group across West Bengal, Odisha, and Assam.
Founded in 1989, the FATF regulates flow of funds between member countries and ensures compliance with its guidelines to curb terror financing and money laundering in member nations. India is one of its 40 members, including 38 jurisdictions and two regional organisations, such as the European Commission and the Gulf Cooperation Council.
The watchdog released its first guidance and best practices paper on asset recovery, named “Asset Recovery Guidance and Best Practices,” documenting a very low percentage of assets confiscation across member states. The stated objective of the paper was to help member states gain a better understanding of the new standards through case studies, with an aim to improve confiscation of assets used or derived from criminal activities.
“Figures released by Interpol and UNODC suggest a very low percentage of criminal assets are confiscated. FATF’s assessments show that more than 80 percent of jurisdictions are operating at low or moderate levels of effectiveness in asset recovery,” said the paper.
Rose Valley, IREO probes cited in FATF paper
In one of the cases cited in the paper, FATF highlighted ED’s probe into diversion of funds into shell companies by promoters of Rose Valley, who allegedly duped thousands of investors into investing in real estate projects.
The case is being probed by the federal agency based on FIRs filed by police in Odisha and West Bengal, following complaints from homebuyers and real estate investors. The agency has a total of five money laundering cases against Rose Valley.
Investigation revealed that Rose Valley companies collected funds to the tune of Rs 17,520 crore by luring people, mainly from low-income groups, with promises of land parcels or time sharing in hotels; in the event of inability to deliver, they were promised a refund, along with interest, on maturity of investments. Time sharing refers to ownership of properties, generally commercial ones, for a specific period, where the periodic owner receives revenue and profits generated from the properties.
ED alleges that Rose Valley companies did not repay Rs 6,666 crore to investors.
As part of the proceedings, ED attached funds amounting to Rs 515 crore in 2,987 bank accounts, and later converted them into 700 fixed deposits after confirmation of attachment by the Adjudicating Authority. The agency handed over the attached assets to the Asset Disposal Committee, constituted by the Calcutta High Court, paving the way for the restitution of funds upwards of Rs 500 crore to more than 75,000 investors.
Another case study cited in the FATF paper was ED’s probe into a fraud case involving the Agri Gold group of companies.
The agency launched a money laundering probe in 2018 based on cases against the Agri Gold group of companies in Andhra Pradesh, Telangana, Karnataka, Odisha, and the Andaman & Nicobar Islands.
The probe revealed that the Agri Gold group of companies collected deposits amounting to Rs 6,380 crore from around 19 lakh customers and 32 lakh account holders, in the name of real estate investment, with a promise of high returns or a residential plot.
According to the ED, the firm—for the purpose of syphoning funds—floated more than 130 companies, which were used to collect deposits as ‘advances for plots’ from depositors, without having adequate possession of land.
In this case, the agency attached movable and immovable assets worth more than Rs 4,000 crore, spread across various states, valued at an estimated Rs 4,141.2 crore.
Telangana HC in June allowed ED to carry out the restitution of properties, including 397 parcels of agricultural land, residential and commercial plots, and apartments. Of the total 397 attached immovable properties, 380 are located in Andhra Pradesh, 13 in Telangana, and 4 in Karnataka, the agency said in June.
ED’s probe and attachment of properties in the money laundering case involving the real estate firm IREO group of companies was also referred to in the FATF paper. The watchdog also took note of ED’s prompt response to a Mutual Legal Assistance request received from the United States against an Indian national involved in an international drug syndicate.
The agency last year invoked a rarely-used provision of the Prevention of Money Laundering Act, 2002, to register an Enforcement Case Information Report (ECIR) against two Uttarakhand-based brothers, Banmeet Singh and Parvinder Singh. The duo was accused of operating an international drug racket through a complex network of clients and agents to sell banned substances in the US, the UK and multiple European countries.
Responding to the FATF recommendations and guidelines on best practices for confiscation and restitution of crime properties, an agency spokesperson said Wednesday that the FATF guidelines would serve as valuable resources for countries seeking to strengthen their anti-money laundering and asset confiscation mechanisms.
“The publication of the ‘Asset Recovery Guidance and Best Practices’ marks an important step forward for the global law enforcement community in depriving criminals of their illicit gains and ensuring that financial crime does not pay. It also reinforces India’s position as a key contributor to international efforts in combating money laundering,” the agency said.
Adding, “The inclusion of Indian examples and references to ED’s practices underlines the credibility of India’s enforcement mechanisms and the value of its experience in shaping future global standards. The guidance is expected to serve as a valuable resource for countries seeking to strengthen their asset recovery systems, and India’s leadership through the Directorate of Enforcement will continue to play a pivotal role in promoting its implementation and further advancement of global asset recovery cooperation.”
(Edited by Amrtansh Arora)