2025 Supreme(Online)(ATFP) 13113

APPELLATE TRIBUNAL FOR FORFEITED PROPERTY
Balesh Kumar, Member, Rajesh Malhotra, Member
Punjab National Bank – Appellant
Versus
The Financial Intelligence Unit Delhi – Respondent
FPA-PMLA-3175/DLI/2019

Penalty under PMLA Section 13 for non-compliance by reporting entity is strict liability; mens rea not required. Calculation of penalty must be consistent – for delays per month, for incomplete filings per transaction. Repeated penalty for same deficiency not justified.

Headnote:(A) Prevention of Money Laundering Act, 2002 - Sections 12, 12A, 13 - Prevention of Money Laundering (Maintenance of Records) Rules, 2005 - Rules 2(1)(g), 3(1)(A),

(B),(BA),

(C),

(D),(E),(F), 5, 7, 8, 9 - Penalty for non-compliance by reporting entity - Cash Transaction Reports (CTR), Suspicious Transaction Reports (STR), Non-Profit Organisation Transaction Reports (NTR), Cross Border Wire Transaction Reports (CBWTR) - Failure to evolve effective internal mechanism - Imposition of monetary penalty - Strict liability - Mens rea not essential for civil penalties under PMLA. (Paras 6, 12, 30-34)

(B) The penalty under Section 13(2)(d) is attracted as soon as contravention of statutory obligation is established; intention of the parties is irrelevant unless the statute requires mens rea. The Director has discretion to choose among actions under Section 13(2)(a) to (d), but imposition of penalty rather than warning is justified when contraventions are serious and repeated. (Paras 30-34, 13)

Facts of the case:
The appellant bank, a reporting entity under PMLA, was issued a show cause notice for non-compliance with various reporting obligations during review period April 2016 to November 2017. The Director, FIU-IND, after inquiry, imposed a total penalty of Rs.15,62,90,000 for delays and failures in filing CTRs, STRs, NTRs, CBWTRs, non-implementation of RFIs, and lack of effective internal mechanism. The bank appealed, contending that the penalties were excessive, that technical errors caused delays, and that alternative actions should have been taken.

Findings of Court:
The Appellate Tribunal upheld most findings of non-compliance but modified certain penalties. It reduced the cumulative delay for CTRs from 151 to 38 months (penalty Rs.3,80,000) and upheld Rs.1,00,000 for lack of internal mechanism for CTRs. For STRs, the penalty of Rs.22,40,000 for delayed filing of 224 STRs was set aside as it was calculated per transaction rather than per month of delay; but penalty of Rs.34,30,000 for incomplete STRs (343) was upheld. Penalty for NTRs (Rs.12,70,000 for delay and Rs.14,57,70,000 for non-reporting of 14,577 transactions) was upheld, but the separate penalty of Rs.1,00,000 for lack of internal mechanism was dispensed with as it was repeated. For CBWTRs, penalty of Rs.27,00,000 for delay was upheld, and again the internal mechanism penalty was dispensed with. A penalty of Rs.1,00,000 under Section 12A was upheld. Total penalty reduced to Rs.15,37,50,000. The Tribunal held that the Director had given detailed reasons and that penalty was appropriate given the gravity of non-compliances; the principle of strict liability applied. (Paras 7-14)

Issues: The main issues were whether the penalty imposed for each type of non-compliance was correctly calculated; whether the failure to have an effective internal mechanism could be penalized repeatedly; and whether the Director should have resorted to less severe actions under Section 13(2)(a)-(c) instead of monetary penalty.

Ratio Decidendi: The Tribunal ruled that penalty under Section 13(2)(d) is imposed for each failure, and the calculation must be consistent - for delays, per month of delay; for non-filing or incomplete filing, per transaction. Repeated penalty for the same deficiency (lack of internal mechanism) is not justified. The Director's discretion to impose monetary penalty rather than warning is proper when contraventions are serious and systemic. Mens rea is not required for civil penalties under PMLA. (Paras 13, 30-34) Result : Appeal partly allowed; total penalty reduced from Rs.15,62,90,000 to Rs.15,37,50,000. Pending applications disposed of.