Tribunal reduces FIU's Rs 1.66-cr penalty on NSEL

Says no further interference of earlier order needed; NSEL to go for appeal

The appellate tribunal under the Prevention of Money Laundering Act (PMLA) has reduced the penalty levied by the Financial Intelligence Unit-India (FIU-IND) on National Spot Exchange (NSEL). It said no further interference on the order was required. 

The exchange says it would appeal.

FIU-IND is a body reporting directly to the Economic Intelligence Council, which the finance minister heads. It is the central national agency responsible for coordinating of action on suspect financial transactions.

“The query you have raised is pertaining to a matter that is legal in nature. Hence, we would not like to make any statement other than that NSEL is contemplating to file an appeal against the said order as NSEL is not a reporting entity as envisaged in PMLA. Hence, PMLA sections are not applicable to NSEL,” an NSEL spokesperson said.

FIU had earlier levied a total penalty of Rs 1.66 crore for various alleged violations under PMLA. Each of the violations was charged with a maximum penalty of Rs 1 lakh, adding up to the sum. NSEL had then moved the PMLA appellate tribunal.

In an order dated June 27, the tribunal chaired by Manmohan Singh cited the absence of a reasoned order for each such violation and cut the penalty amount to Rs 15,000, from Rs 1 lakh earlier.

“There is force in the argument of the appellant. If a major penalty as provided under the statute is to be imposed, a valid explanation is to be given in the impugned order as to why a major penalty of Rs 1 lakh for each failure is imposed but such explanation/reasons are missing, although the conduct of the appellant was discussed in different context,” the tribunal said.

“We are of the view that if discretion is exercised to impose the maximum penalty of Rs 1 lakh for account of each failure, a reasoned order was to be passed. Therefore, in the absence of a reasoned order and discussion, we reduce the penalty from Rs 1 lakh for each failure to Rs 15,000.”

On the merits, the tribunal felt “the appellant has failed to make any case.” It said, “We are of the considered view that the appellant was obligated as a reporting entity within the meaning of Section 12 of PMLA, 2002. All arguments of the appellant in this respect are rejected.”

As far as the appeal on merit is concerned, no ground of interference of impugned order is made out, it concluded. “The present appeal is, accordingly, disposed off by modifying the part of the order in relation to imposing the maximum penalty,” the tribunal said.