Trade-Based Money Laundering Syndicate: ED Files Prosecution Complaint in Kolkata.

Headnote:

The Directorate of Enforcement (ED), Kolkata has filed a Prosecution Complaint before the Special Court (PMLA), Kolkata against M/s Yecnail Enterprises Pvt. Ltd. and several associated entities for operating a Trade-Based Money Laundering (TBML) syndicate. The syndicate allegedly utilised shell importing companies to fraudulently remit highly overvalued import payments abroad, thereby laundering Proceeds of Crime generated from Customs-related offences. Properties worth ₹3.98 crore, including a residential flat, have been attached as Proceeds of Crime. Investigation is ongoing to trace additional POC and identify further persons involved in India and abroad.

Background:

• ED initiated an investigation based on information of a complex TBML scheme involving shell importing companies operated and controlled by a syndicate.

• These entities imported low-value stones but declared them as high-value precious/semi-precious stones.

• Over-invoiced import documents and fabricated valuation reports were created with the connivance of government-approved valuers and Customs House Agents (CHAs).

• Funds were routed through several dummy companies within India (layering) and subsequently remitted abroad as purported import payments.

• This enabled large-scale illicit outward remittances disguised as legitimate trade transactions.

Findings / ED’s Observations:

• The importing companies existed only on paper and were created solely for routing fraudulent import payments.

• Import values were artificially inflated using manipulated documents and fabricated valuation certificates.

• The fraudulent payments made to foreign suppliers represent Proceeds of Crime (POC) generated from Customs Act offences.

• Multiple layers of domestic entities were used to obscure fund trails before remittance abroad.

• A Prosecution Complaint has now been filed under PMLA, 2002 against:

– M/s Yecnail Enterprises Pvt. Ltd.

– Associated dummy importing firms

– Individuals linked with creation and operation of the syndicate

Attachment of Properties:

• ED has issued Provisional Attachment Orders for assets worth ₹3.98 crore (approx.), including:

– Movable properties

– Immovable properties

– One residential flat

• These assets are identified as Proceeds of Crime or property of equivalent value involved in the money laundering activities of the TBML syndicate.

Current Status & Investigation:

• The Prosecution Complaint has been filed before the Hon’ble Special Court (PMLA), Kolkata.

• Further investigation is underway to:

– Identify additional entities involved

– Trace proceeds of crime within India

– Track overseas beneficiaries of the fraudulent import remittances

– Determine the role of valuers, CHAs, and other intermediaries

Legal Provisions Discussed:

• Section 3 & 4, Prevention of Money Laundering Act, 2002 – Offence of money laundering & punishment.

• Sections 132 & 135, Customs Act, 1962 – False declaration, fraudulent documents, evasion of duty.

• PMLA (Provisional Attachment of Property) Rules – Attachment of POC or equivalent value property.