Money Laundering Typologies Research in 21st Century - India Perspective-2
This is in continuation to Money Laundering Typologies Research in 21st Century - India Perspective-1
Corruption
Corruption is a deep-rooted menace that undermines governance, distorts public policy, and erodes trust in institutions. It hampers economic growth, disproportionately affects the poor, and diverts critical resources meant for public welfare. In India, the impact of corruption is far-reaching—spanning sectors such as infrastructure, natural resources, and public procurement—creating systemic inefficiencies and facilitating the growth of illicit economies. The financial gains from corrupt practices are often laundered through complex networks, making enforcement a challenging but crucial task.
Govt. Sector Linkages
The Enforcement
Directorate (ED) plays a central role in combating corruption by targeting its
financial backbone. As the agency responsible for investigating offences under
the Prevention of Money Laundering Act (PMLA), the ED focuses on tracing, freezing,
and confiscating proceeds of crime. By depriving corrupt actors of their
illicit wealth, the ED ensures that financial crime does not pay. With a
proactive approach across high-impact cases and increased international
cooperation, the Directorate remains committed to dismantling corruption
networks and upholding the integrity of the financial system. Tackling
corruption continues to be one of its top priorities in safeguarding the
nation’s economic and institutional stability
Source: Fiu-Ind Annual Report 2024-25
In a
high-profile corruption and money laundering case, the Enforcement Directorate
(ED) targeted Mr. A, a senior official who held key positions in the Bihar
Government and on Central Government deputation. During his tenure, he amassed
approximately Rs. 90 Crore in proceeds of crime (PoC) through corrupt
practices, primarily by extracting kickbacks from contractors. The ED’s
investigation exposed a sprawling network of illicit financial dealings
stemming from these activities. The modus operandi involved laundering the PoC
through diverse channels: investments in the share market, acquisition of
movable and immovable properties, and cash-based expenditures. The ED responded
decisively, conducting searches at 70 premises across cities like Delhi,
Punjab, West Bengal, Maharashtra, Rajasthan, and Bihar, arresting 11
individuals, and seizing assets including Rs. 66 Crore in shares and bank
balances, Rs. 1.3 Crore in cash, luxury watches worth Rs. 65 Lakh, and
jewellery valued at Rs. 2 Crore. Additionally, seven properties worth Rs. 24
Crore in Nagpur, Delhi, and Jaipur were attached, with a Prosecution Complaint
filed on December 16, 2024, before the Special PMLA Court in Patna.
Real Estate Scams
Investigation
by the ED was initiated under PMLA for illegal allotment of sites by the
Officers and officials of Mysore Urban Development Authority (MUDA) in
collusion with Real Estate Businessmen/other politically Influential persons
for their benefit and its subsequent projection as untainted.
Source: FIU-Ind Annual report 2024-25
Investigation revealed that a total of 1045
sites having market value of ₹ 700 Crores was illegally allotted by MUDA in
contravention of statutory guidelines and orders of State Government. Deep
rooted nexus emerged between MUDA Officers/Officials with real estate
businessmen/brokers/influential persons in making the illegal allotment of
sites. Evidences were unearthed on systematic illegal allotment of sites by
MUDA officers/officials and gratification received in in cash. Such proceeds of
crime were routed/layered through Sham General Power of Attorney /Settlement Deeds/Gift
Deeds/Sale Deeds and unaccounted cash from the sale of illegally allotted sites
was generated. As part of investigation, a Provisional Attachment Order was
issued attaching 160 sites having registered value of ₹ 82 crores and market
value of ₹300 crores (Appx.). Information gathered during the investigation for
the offence of money laundering was also shared with Lokayukta Police for
taking necessary action. The Lokayukta police accepted the findings of PMLA
investigation and submitted a report to special court that additional report
will be submitted under Section 173 (8) of Cr PC on the same.
In a corruption case, elected representative- Mr. N while holding a prominent position in Ministry of Housing and Urban Development, Government of India had misused his position to illegally grant planning permission to XYZ Group and received a huge amount of kickback for facilitating the planning permission to XYZ Group.
Source: Fiu-Ind Annual Report 2024-25
In the case, investigation was initiated by ED
under PMLA, 2002 wherein it was revealed that Mr. N during the tenure when he
was holding the post in Minister of Housing and Urban Development, had
illegally granted permission for construction of additional buildings to XYZ
Group. For granting this permission, amount of ₹ 27.90 crore was received as
kickback. The said amount of bribe was received by Mr. N in the bank account of
his son’s company. XYZ Group layered the bribe amount through multiple shell
companies into one of the shell company M/s J. M/s J further transferred the
amount of bribe to the account of Mr. N’s Son’s company as unsecured loan.
Further, this amount was utilised to purchase various immovable property in the
name of company. During the course of investigation, searches were conducted at
17 premises belonging to Mr. N and XYZ Group which led to seizure of several
incriminating data/ document. Subsequently various immovable property worth ₹
24.18 crore purchased from the received kickback was attached by ED on
09.01.2025
In a
case of misappropriation of funds of a State Level Corporation of Karnataka, ED
took up investigation of the basis of F.I.R.s registered by Bengaluru Police
regarding illegal diversion of funds by the officers of a corporation in
connivance with bank officials. The said facts came to the fore from the suicide
note of an accountant of the Corporation.
The
misappropriation of funds of the Corporation was carried out on the
instructions given by Mr. A, the then minister in Karnataka Govt. to MD of the
Corporation. It was also found during ED investigation that a sum of ₹ 89.63
Crore was diverted from the saving bank account and overdraft account of the
Corporation to 18 fake bank accounts, opened by the accused using fabricated
documents, in a Co-operative Bank in Hyderabad in connivance with the Chairman
of the bank. These funds were later withdrawn in the form of cash, liquor,
bullion, luxury cars and gift cards. The significant portion of diverted funds
to the tune of ₹ 20.19 Crore of the Corporation was found to be distributed in
cash to voters during General Elections 2024. Siphoned funds of the Corporation
were also transferred to some liquor traders in Hyderabad for bulk supply of
liquor during March, 2024 clearly establishing the link of supply of liquor
with General Election 2024. Gift cards of value ₹ 1.40 Crore were purchased and
distributed to public and these gift cards were found to have been redeemed in
Hyderabad.
Source: Fiu-Ind annual Report 2024-25
During
ED investigation, searches were conducted in different states leading to
seizure of ₹ 72 Lakh. 6 individuals who were found to have played a pivotal
role in this conspiracy were arrested under the PMLA provisions. ED filed its
prosecution complaint in the matter on 09.09.2024 against 25 accused persons
Illicit Human Trafficking
Illicit
human trafficking under the guise of overseas employment or migration has
emerged as a serious challenge, particularly with individuals being duped by
unscrupulous agents and traffickers. Victims are often lured with false
promises of jobs, education, or better living conditions abroad, only to find
themselves in precarious or illegal situations. This form of trafficking
exploits the aspirations of vulnerable populations and undermines legitimate
migration processes. It also fuels a parallel economy driven by forged
documents, hawala networks, and illegal border crossings, posing a direct
threat to national security and international relations.
ED
plays a critical role in curbing this form of trafficking by targeting the
financial networks that sustain it. Acting under the provisions of the
Prevention of Money Laundering Act (PMLA), the ED investigates cases where
proceeds of crime are generated through illegal immigration rackets, fake job
consultancies, and travel agencies involved in trafficking under false
pretences. By tracing and attaching illicit assets and dismantling financial
channels, the ED ensures that such criminal operations are held to account.
Tackling human trafficking linked to illegal immigration remains a high
priority for the Directorate, especially in the context of safeguarding India’s
citizens and its reputation globally.
Source: FIU-IND Annual Report 2024-25
In a notable case of human trafficking and money laundering, the Enforcement Directorate (ED) launched an investigation under the Prevention of Money Laundering Act (PMLA) following a FIR filed by Ahmedabad Police. The investigation was sparked by a tragic incident when a family of four was found dead on the Canada-US border, exposing the perilous nature of illegal immigration rackets. This event served as the catalyst for uncovering a sophisticated scheme orchestrated by unscrupulous agents.
The
core of the scam revolved around a well-organized modus operandi. Agents
targeted individuals desperate to immigrate to the USA, offering them a
deceptive pathway through Canada. They secured fake admissions in Canadian
colleges to obtain student visas for their clients. Once in Canada, these
individuals were guided to illegally cross into the USA rather than attend
college, with the agents pocketing a hefty Rs. 55-60 lakh per person for their
services. The ED’s response has been decisive, involving searches at 35
premises, the seizure of Rs. 92 lakh in cash, four luxury vehicles, and
incriminating documents. The investigation continues to unravel the full extent
of this illicit network.
Trade Based Money Laundering(TBML)
This is a case initiated on the basis of FIR registered by Delhi Police involving the matter of under invoicing imports from China. Importer in India imported under invoiced goods from China to evade Customs Duty. Documents found during the search revealed that a network of cash-handlers were employed in Delhi-NCR to collect cash from manufacturer importers in the region. This cash was deposited in the entities controlled by one middleman and the transaction was projected as collections from 60,000 – 70,000 non existent individuals against the issue of bogus invoices for sale of fictitious software, sale of worthless e-books, etc. From 2017 to 2023, a sum total of ₹2886 Crore was deposited in the bank accounts of various entities controlled by the accused.
Source: Fiu-Ind annual Report 2024-25
Enforcement Directorate, during the investigation in the matter, conducted searches, seized cash amounting to ₹ 1.43 Crore and arrested accused persons. Prosecution complaint dated 13.08.2024 and SPC dated 23.01.2025 were filed before Hon’ble Court. Properties to the tune of ₹ 43 Crore have been provisionally attached
This post is based on FIU-Ind Annual Report 2024-25
Those who read this, also read
1. Money Laundering Typologies Research in 21st Century - India Perspective-1
3. Anti-Money Laundering- Definitions, Origins
4. Financial Intelligence Unit(FIU-Ind)
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