When discussing the Prevention of Money Laundering Act, 2002 (PMLA), we often think of freezing bank accounts, attaching properties, or seizing luxury vehicles. Yet, in a recent and rather unique case, the attachment of more than three dozen horses worth approx. 4 crores, under the PMLA provisions made headlines, sparking conversations about the evolving nature of asset seizure in financial crime investigations.

This case not only highlights the peculiarities of luxury assets but also underlines the flexibility of legal frameworks like the PMLA in addressing the challenges of money laundering in India.

The Context: How Horses Came Under PMLA's Radar

The attachment of horses as "proceeds of crime" under the PMLA arose during an investigation into a high-profile case part of a money laundering investigation in an international cyber fraud case in West Bengal where foreign citizens were duped through fake call centres providing false technical support, fake loans via counterfeit apps etc. The accused had allegedly laundered money through various means, including investments in exotic and high-value assets. Among these were racehorses, which were either directly purchased with illicit funds or maintained and trained using proceeds from criminal activities with their race winnings further reinvested in the cycle of laundering making them a potential repository of laundered money.

Legal Framework: The Reach of the PMLA

The PMLA empowers authorities to attach, confiscate, or seize any property or assets derived from criminal proceeds. Section 5 of the Act allows the provisional attachment of such assets if there is reason to believe they are linked to a scheduled offense. Horses, like other movable assets, fall under the broad purview of "property" as defined under Section 2(1)(v) of the Act. Under such an attachment involving animals, the ED imposes restriction on their sale and once the provisional order is confirmed by the Adjudicating Authority of the PMLA, they can be auctioned and funds obtained from this sale is kept in government treasury or restituted to the victims of the financial fraud.

The attachment of horses, therefore, serves as a reminder of how expansive the definition of "property" is under the PMLA. Whether it's luxury cars, jewelry, real estate, or animals, the

law is equipped to target any asset that serves as a conduit for laundering money.

Challenges in Attaching Horses Under the PMLA

The attachment of horses points to the broader question of unique legal, operational and ethical challenges due to the nature of such movable and living assets.

The first legal challenge that the authorities must overcome is that the horses were purchased or maintained using proceeds of crime. Establishing this link can be complex, particularly if the financial trail is opaque or convoluted.

Secondly, determining the market value of high-value racehorses can be subjective and involves expertise in evaluating factors like pedigree, racing history, and training. Incorrect valuations may lead to disputes or legal challenges.

Thirdly, once attached, unlike other assets, horses will require daily care, including food, medical attention, and training. The welfare of the animals during the attachment period is paramount. The authorities may lack the expertise or facilities to care for such animals. This raises concerns about their ability to ensure humane treatment while the animals are under state custody The enforcement directorate (ED) or other authorities may face logistical hurdles in maintaining these animals during ongoing investigations. Neglect during the attachment process could lead to ethical violations and animal welfare concerns.

Fourthly, establishing clear ownership of the horses will be absolutely crucial. Horses may be jointly owned or registered under different names, making it challenging to tie them directly to the accused.

And finally, movable assets like horses can be difficult to manage and secure as evidence during ongoing investigations. Ensuring they remain in their original condition is crucial for their admissibility in court.

Global Context: Parallels and Precedents

The use of luxury assets like horses in financial crime isn't unprecedented. Globally, there have been cases of exotic animals and other high-value assets being confiscated as part of laundering investigations:

• United States: Artwork and luxury collectibles, such as rare cars, have been regularly targeted under anti-money laundering laws.
• Europe: Racehorses were linked to tax evasion and money laundering schemes in several high-profile cases in France and the UK.
• Africa: Wildlife trafficking proceeds are often laundered through investments in high- value animals, leading to international conservation and financial crime collaborations.

As the enforcement of the PMLA evolves, this case will likely set a new precedent. It highlights the peculiarities of luxury assets and underlines the flexibility of legal frameworks like the PMLA. It affirms that all forms of assets, conventional or unconventional, are within the ambit of anti-money laundering laws in India. For policymakers, this is an opportunity to refine frameworks addressing the operational and ethical complexities of attaching movable and living assets. For enforcement agencies, it's a chance to develop specialized expertise in handling niche assets while maintaining compliance with international standards.

(The author is a lawyer practising in the Supreme Court of India)

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