During March to May 2013, there was widespread reporting in the media about sting operations carried out by the website Cobra Post that allegedly exposed deficiencies in the anti-money laundering preventive measures applied by the Banks including Canara Bank. The sting operation involved the Cobra Post reporter visiting the branches of the financial institutions with a story; that he wanted to invest/safe-keep substantial amounts of illicit or unaccounted cash. The website had videotaped the conversations with the officials/employees of the Banks that were played out in the media suggesting widespread violations of statutory obligations under the PMLA.
In the Appeal Canara Bank objected the impugned order inter alia on the grounds as follows:
I. the Learned Director, Financial Intelligence Unit-India has failed to appreciate that considering the facts and circumstances of the present case, mere enquiries from the unknown person without any intention to act will not come within the purview of “attempted transaction” as mentioned in the definition of suspicious transactions under Rule 2 of PMLA Rules, 2005, therefore, the same may not require reporting under section 12 of the PMLA, 2002,
II. the Learned Director, Financial Intelligence Unit-India has failed to appreciate that the Appellant had a mechanism in place for reporting off-line (non-transaction based) alerts by branches/offices, which it had implemented by issuing guidelines duly communicating 27 IBA recommended off-line alert scenarios along with reporting format for escalating the same to the controlling office, vide circular no.357/2011 dated 05.12.2011. Further, the Learned Director, Financial Intelligence Unit-India failed to appreciate that the Appellate had enabled reporting/escalation of off-line alerts in AML package and guidelines were reiterated vide circular no. 180/2012 dated 22.06.2012 and 147/2013 dated 31.03.2013;
III. the Learned Director, Financial Intelligence Unit-India has issued the Impugned Order without applying its mind and mechanically acted on the sting operations conducted by the Cobrapost (a media portal) without verifying the authenticity of such reports of violation of PMLA, 2002 and PMLA Rules by the Appellant.
C. FIU was duly represented by Senior Advocate Neeraj Krishan Kaul Additional Solicitor General (ASG) instructed by Mr. Satish Aggarwal, similar Appeals were also filed by various Banks such as Yes Bank, ICICI Bank, HDFC, State Bank of India etc.
D. The Hon’ble Tribunal in its order dated 28.06.2017 set aside order 29.10.2015 inter alia on the ground that the FIU has failed to establish evidence its case on electronic evidence and further observed that the FIU even failed to investigate beyond the edited tapes and transcripts.
E. The Hon’ble Tribunal further observed that FIU has not produced the original recorded tapes and has sought to reply upon the incomplete version as broadcasted by the Cobra Post. Therefore the transcript uploaded online is not admissible and authorized under the law in the absence of proving this case as alleged by FIU.
Sting operation conducted by COBRA POST REPORTER. In this matter, Financial Intelligence Unit-India (FIU) imposed a fine vide its order dated 29.10.2015 on exercising its power under section 12 of the PMLA Act, 2002. This Impugned Order was passed by the FIU after solely relying upon the report of the sting operation conducted by Cobra Post without even verifying the authenticity of such report. Aggrieved by the said order Canara Bank filed an Appeal under section 26 of the PMLA Act, 2002. Canara Bank was represented by JURIXIN, Advocates & Solicitors led by Mr. Premtosh Mishra.