Government to cut cost in attaching economic offenders’ assets
The ED investigates cases of money laundering and violations of foreign exchange norms and confiscates assets bought with the proceeds of these crimes
The government is discussing possible amendments to the Prevention of Money Laundering Act (PMLA) to ease the burden on the Enforcement Directorate (ED), which spends over Rs 50 crore a year in the upkeep of properties and other assets it has confiscated from suspects over the years.
The ED investigates cases of money laundering and violations of foreign exchange norms and confiscates assets bought with the proceeds of these crimes.
Solutions being discussed include the auction of such assets, whose proceeds could be kept with the government as a deposit. The money will be returned if a court acquits suspects who are under investigation or on trial.
To protect the interests of the owners of these assets, which include business and personal properties such as houses, offices, land parcels, cars and even paintings and jewellery, there are no provisions currently under the PMLA to auction confiscated assets before the cases are tried and disposed of.
“The owner of the attached assets could be given right of first refusal when we auction them; this money will be kept as deposits and we could look at the option of returning it with interest, if we lose the case,” an ED officer said, requesting anonymity.
Since the PMLA was implemented in 2005, ED has attached assets and immovable properties worth around Rs 30,000 crore, but they cannot be monetised, and the courts take years to decide the cases. There are over 1,320 cases of alleged money laundering pending trial at various courts across the country since 2005.
There are issues such as encroachment on seized land, payment of rent to warehouses where valuable seized items are stored and the potential devaluation of these assets.
Assets such as automobiles and art are stored in facilities provided by the Central Warehousing Corporation, a public sector entity.
“But they charge us rent, which goes into crores given the years and space we use for storing attached assets,” said a second ED officer.
ED has to ensure the maintenance of the assets so that after a case is disposed of in its favour, the assets are in a good enough condition to be auctioned to generate revenue and in the meantime, the assets have not lost their value for lack of proper upkeep.
“The only solution to this problem is speedy and effective trials of money laundering cases. But the number of piled up cases is not only a statement against the speed with which special courts dispose of ED cases, it also at times shows that the PMLA is being misused by the agency. Look at the number of cases being stayed by the courts,” said Anuradha Dutt, co-founder and managing partner of DMD Advocates.
The government is also talking to the National Building Construction Corporation (NBCC) to maintain immovable properties. There is no provision under the PMLA to rent out houses and buildings confiscated by ED.
The value of such assets seized by the ED has increased exponentially over the years, from close to Rs 14,000 crore in March 2015 to Rs 23,000 crore by the end of December 2017 to about Rs 30,000 crore by the end of March 2018.