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Lahore High Court Annuls FIA’s Account Freezing in Money Laundering Case

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Lahore High Court Annuls FIA’s Account Freezing in Money Laundering Case

Islamabad 06-07-2024: In a significant ruling, the Lahore High Court annulled the freezing of Muhammad Bilal Nawaz’s bank account by the Federal Investigation Agency (FIA), citing procedural lapses and the need to balance law enforcement powers with individual rights.

The case involved a complaint received by the FIA on 17 October 2022, alleging that Nawaz was involved in financial crimes, including unlawful money transfers into his MCB Bank account. Acting on this complaint, the FIA registered Enquiry No. 35/2023 and instructed the bank to debit-block Nawaz's account under Section 25(1) of the Anti-Money Laundering Act 2010 (AMLA).

Nawaz’s counsel, Mr. Muhammad Osama Asif, argued that the FIA Act of 1974 distinguishes between "inquiry" and "investigation," stating that the agency lacks the authority to freeze accounts during an inquiry. Citing several case laws, including “Najib Rahim v. Federation of Pakistan” (PLD 2017 Sindh 53) and “Muhammad Sohail Shaikh v. The State” (PLD 2021 Lahore 612), the counsel contended that such powers could only be exercised during the investigation stage.

The Deputy Attorney General, Mr. Asad Ali Bajwa, countered that the FIA’s actions were justified under Section 5(1) of the FIA Act, which provides broad powers to freeze accounts during both inquiries and investigations, especially when there is credible evidence of money laundering.

The Court, led by Justice Tariq Saleem Sheikh, examined the definitions and distinctions between "inquiry" and "investigation" under various legal provisions. It emphasized that while Section 5 of the FIA Act provides extensive powers to the FIA, these must be exercised within the bounds of procedural fairness.

The Court highlighted that an inquiry is a preliminary fact-finding process, whereas an investigation is a detailed examination aimed at gathering evidence for legal action. The Court affirmed that the FIA has the authority to freeze bank accounts during inquiries and investigations but stressed the need for adherence to legal procedures to prevent arbitrary actions. The Section 550 of the Cr.P.C. allows law enforcement to seize property suspected of involvement in criminal activities, covering both movable property and bank accounts.

The Court found that the FIA failed to comply with Sections 8 and 9 of the AMLA, which mandate obtaining court permission and submitting progress reports. The judgment underscored the importance of balancing law enforcement powers with the protection of individual rights, highlighting that arbitrary freezing of accounts violates constitutional protections.

The Court annulled the restriction placed on Nawaz’s bank account, accepting his petition and emphasizing the necessity for the FIA to follow due legal process. This judgment serves as a reminder of the critical balance between the state’s duty to combat financial crimes and the protection of individual rights.