New Delhi: The Delhi High Court Monday ruled that profits from illegal cricket betting can constitute “proceeds of crime” under the anti-money laundering law, even when cricket betting itself is not specifically listed as an offence under the legislation.
Using the analogy of a “fruit of a poisoned tree”, a bench of Justices Anil Kshetarpal and Harish Vaidyanathan Shankar held in a 36-page judgment that the “taint” attached to property originating from criminal activity persists throughout its subsequent use.
Even if illegal cricket betting is not a ‘scheduled or predicate offence’ under the Prevention of Money Laundering Act (PMLA), 2002, the profits generated from it can constitute ‘proceeds of crime’ under Section 2(1)(u) of the statute, it said.
Under PMLA, ‘proceeds of crime’ refer to any property/profit derived or obtained as a result of criminal activity relating to a scheduled offence. A ‘scheduled’ or ‘predicate’ offence is one listed under Section 30 of the 2002 Act. This provision contains a range of offences across different statutes.
Simply put, to be accused of money laundering under the PMLA, the offence has to be tied to one of the existing offences enumerated under this provision.
“..If a person acquires any immovable property through acts of forgery, cheating and criminal conspiracy and thereafter utilises such property for a downstream activity, such as conducting an unlicensed real-estate business, which is not a scheduled offence, the proceeds generated from the latter activity nonetheless constitute ‘proceeds of crime’,” the court ruled.
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Rs 2,400-cr betting racket
The judgment came in response to a batch of six petitions challenging the Enforcement Case Information Report (ECIR) lodged by the Enforcement Directorate (ED) in 2015 in connection with alleged hawala transactions and illegal cricket betting operations conducted through a UK-based website called ‘Betfair.com’.
ED alleged that this international cricket betting racket was also being run from a farmhouse in Sikandarpur village of Vadodara in Gujarat.
After searching its premises, the ED found documents, cash and digital records allegedly linked to the hawala network operation being used to facilitate international betting. ED subsequently registered a case against the accused for offences, including cheating, criminal conspiracy and forgery, among others.
Detailed investigation revealed that one of the accused, Naresh Bansal, had acted as a key conduit in this betting racket by distributing client login IDs of the banned betting website in exchange for a fee.
Between 2014 and 2015—a span of one year—the accused allegedly generated Rs 2,400 crore through illegal betting by placing and accepting bets on various matches, ED said.
The entire operation involved bookies and punters spread across multiple countries, including India, Pakistan and Dubai. This prompted ED to issue a provisional attachment order in 2015, attaching properties worth Rs 20 crore on the ground that they originated from the betting racket and connected illegal activities.
What the accused argued
The accused, in their petitions, challenged show-cause notices and provisional attachment orders for the properties, saying that there was no “proper reason to believe” given by the authorities, as required under the Act.
Another question that arose was whether properties attached by ED would amount to ‘proceeds of crime’ as cricket betting is not a scheduled offence under PMLA.
One of the safeguards listed under the PMLA is ‘reason to believe’, which essentially says that only when a designated officer, on the basis of material in possession, has reason to believe that someone is either in possession of proceeds of crime or has committed an offence of money laundering, can action be taken. Such reasons must also be recorded in writing, the law says.
How the court responded
The court held that authorities in the present case had reasons to believe that the accused’s involvement existed, based on sufficient and cogent material in their possession.
Their “belief” was not based on suspicion or mechanical consideration, the bench noted.
There exists a clear nexus between the material collected in this case and the involvement of the petitioner in the money-laundering process, the court added.
The high court said such proceeds from illegal cricket betting remain traceable to the original tainted property, “especially when the said downstream activity is a final manifestation of a chain of criminality, intricately interwoven with multiple preceding criminal acts, any profit derived therefrom clearly constituting ‘proceeds of crime’ within the contours of the PMLA”.
Pointing out that the accused’s conduct was not merely incidental but a deliberate act to further criminal conspiracy and facilitate betting, the court said that the use of login-IDs for the website generated approximately Rs 2,400 crore as ‘proceeds of crime’.
“Out of the said amount, Rs 60 crore was transferred to the petitioner, as such the active role of the petitioner in procuring and distributing Super Master IDs (login IDs), which were an indispensable requirement for continuation of the international cricket betting racket, clearly amounts to participation in the generation of proceeds of crime arising from scheduled offences,” the court ruled while dismissing all six petitions.
(Edited by Prerna Madan)
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