The Hon’ble High Court of Orissa vide order dated 13.07.2020 while denying a bail application held that money laundering was an act of financial terrorism that poses a serious threat not only to the financial system of the country but also to the integrity and sovereignty of a nation.

The said order was passed in response to a bail application filed by one Mohammad Arif, accused of involvement in laundering of sums of money accumulated under a bodacious Ponzi scheme, floated by another company, namely, M/s. Fine Indisales Pvt. Ltd, inducing susceptible depositors by way of misrepresentation, promising immediate refund in case of any default and timely payment of return, with a “terminal ulterior motive to siphon off the funds collected from public“.

The money collected from such scheme immediately got transferred to different bank accounts of individuals as well as firms under the management and control of the Promoters/Directors/Shareholders of the said company which was an act of sheltering the said “proceeds of crime” under Section 2 (u) of the Prevention of Money Laundering Act 2002. The Forensic Audit conducted by the CBI during the course of investigation revealed that the total money invested by the depositors was Rs.703, 50, 00,079/-.

Denying the bail application, Justice S.K Panigrahi cited that the International Monetary Fund estimates that laundered money generates about $590 billion to $1.5 trillion per year, which constitutes approximately two to five percent of the world’s gross domestic product.

“The Supreme Court of India has consistently held that economic offences are sui generis in nature as they stifle the delicate economic fabric of a society. These offences permeate to human consciousness posing numerous questions on the very integrity of the business world”, the bench reflected.

Venting its ire, the Single Judge proceeded to state that the offences, such as this, were committed with a deliberate design with an eye on personal profit and often shown to be giving “scant regard for a sordid residuum left behind to be borne by the unfortunate starry eyed petty investors“.

Furthermore, Justice Panigrahi held that the abuse of financial system, like in the instant case, had great potential to negatively impact a country’s macro economic performance and may also adversely impact its cross-border externalities. It was stated that such actions by the Petitioner could inflict reputational damage of the country in the world of business and commerce both inside the country and abroad.

The Hon’ble High Court thus held as follows, “The act of money laundering is done in an exotic fashion encompassing a series of actions by the proverbial renting of credibility from the innocent investors. The offenders often target the unsuspecting, rural and economically distressed populations of our state who while hoping for a dreamy return, part with their hard-earned monies”.

Order:BLAPL 2607 of 2020