Under the PMLA, the ED files a prosecution complaint against Amway India

By Consultants Review Team Tuesday, 21 November 2023

The Enforcement Directorate (ED) announced on Monday that it has filed a prosecution charge against Amway India under the Prevention of Money Laundering Act, 2002 (PMLA)The complaint was submitted with the Hon'ble Metropolitan Sessions Judge cum Special Court (PMLA) in Hyderabad, which took cognizance of the case the same day. The ED's probe comes from multiple FIRs filed by the Telangana Police against Amway and its Directors under various sections of the Indian Penal Code (IPC), 1860.

According to the allegations, Amway promoted an illegal 'Money Circulation Scheme' under the guise of selling goods and has been defrauding the general public by promising them very high commissions or incentives for simple enrolment of new members and claiming that these commissions or incentives would continue in perpetuity, according to the investigation agency.

According to the conclusions of the ED, Amway has been pushing a Pyramid scheme under the pretense of direct selling. Amway created a multi-level marketing strategy with multiple intermediaries in the shape of distributors instead of selling items straight to the end consumer. The scheme's viability is essentially dependent on recruiting new members, with commissions and incentives increasing as one moves up the ladder.

According to the ED, Amway's activities form a Multi-Level Marketing Scheme and a Money Circulation Scheme, resulting in the generating of criminal gains totaling Rs 4050.21 crore through the scheduled offense of cheating.

Furthermore, the probe discovered that over Rs 2,859 crore of money collected from members was siphoned off and stored in the bank accounts of offshore investors under the guise of dividends, royalties, and other payments.

In connection with this investigation, the ED stated that it had attached moveable and immovable properties worth Rs 757.77 crore. The situation is currently being investigated further.

Meanwhile, Amway India published a statement through company spokeswoman in reaction to the ED's prosecution, addressing the probe that began in 2011.

"The prosecution complaint currently filed by the Enforcement Directorate pertains to the investigation dating back to 2011 and since then we have been cooperating with the department and have shared all the information as sought from time to time," a spokeswoman for Amway India told the Press Trust of India.

The representative went on to say that Amway has been devoted to legal and regulatory compliance since its inception in India 25 years ago, and has painstakingly maintained a culture of compliance and integrity to this day.

"We want to express our continued faith in the Indian legal and judicial systems in upholding due process as we pursue our legal rights." "Amway is proud of its rich history in India and will vigorously defend itself, as well as the over 2,500 employees and over 5.5 lakh independent distributors who are critical to its mission of helping people live healthier, better lives," a spokeswoman for Amway India remarked.


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