In a landmark judgment that strengthens the fight against financial crimes in sports, the Delhi High Court has ruled that profits generated from cricket betting will be treated as "proceeds of crime" under the Prevention of Money Laundering Act (PMLA). This significant ruling came while dismissing petitions challenging the Enforcement Directorate's actions in a massive international cricket betting case.
The Rs 2,400 Crore Betting Racket
A division bench comprising Justices Kshetarpal and Shankar dismissed a batch of petitions filed by several individuals involved in an alleged Rs 2,400-crore international cricket betting racket dating back to 2015. The petitioners had challenged provisional attachment orders issued by the ED over a decade ago.
The case originated in September 2015 when the Enforcement Directorate attached movable and immovable properties valued at Rs 20 crore belonging to the accused. This was followed by a show-cause notice issued in October 2015 for money laundering violations.
How the Betting Operation Worked
According to ED investigations, the money laundering action was initiated in connection with large-scale hawala transactions and illegal international cricket betting operations conducted through the UK-based website Betfair.com. The agency alleged that the operations were run from a farmhouse in a village in Vadodara.
During raids on the residence of one of the accused, who was allegedly acting as a conduit in the betting network, investigators made crucial discoveries. The accused had reportedly purchased master and client login IDs for a betting platform at Rs 2.4 crore each and made payments abroad through unauthorized channels.
The investigation revealed that these IDs were issued without following the mandatory KYC process. During the search operations, the ED recovered incriminating documents, valuables, and Rs 10 lakh in cash, further strengthening the case against the accused.
Court's Landmark Interpretation of PMLA
The bench provided crucial clarification on what constitutes "proceeds of crime" under PMLA, delivering a judgment that could have far-reaching implications for financial crime investigations. The court observed that if a person acquires any immovable property through acts of forgery, cheating, and criminal conspiracy, and then utilizes such property for downstream activities, the proceeds generated from such activities still constitute 'proceeds of crime' under PMLA.
"If a person acquires any immovable property through acts of forgery, cheating, and criminal conspiracy, and thereafter utilises such property for a downstream activity - such as conducting an unlicensed real-estate business, which is not a scheduled offence - the proceeds generated from the latter activity nonetheless constitute 'proceeds of crime' under PMLA," the bench stated in its ruling.
This interpretation significantly broadens the scope of PMLA, ensuring that profits from subsequent activities, even if those activities themselves aren't scheduled offences, can be treated as proceeds of crime if the original property was acquired through illegal means.
The court's decision marks a significant victory for enforcement agencies battling organized crime in sports betting and reinforces the legal framework for tackling money laundering through seemingly legitimate business activities.
