Money Laundering: ED Conducts Raids At Franklin Templeton Offices In Mumbai, Chennai

In November 2020, the Sebi issued a show-cause notice to the firm following its April 2020 decision to wind up six debt schemes having Rs 25,000 crore of assets under management from 3 lakh investors

The ED is looking to gather more evidence as part of its investigation against the company and its promoters under the Prevention of Money Laundering Act.

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The Enforcement Directorate (ED) is conducting searches at some places linked to asset manager Franklin Templeton and its former and current executives in Mumbai and Chennai as part of a money laundering investigation, quoting some officials news agency PTI said.

According to the report, the federal agency is looking to gather more evidence as part of its investigation against the company and its promoters under the Prevention of Money Laundering Act (PMLA), they said.

In November 2020, capital markets regulator Sebi issued a show-cause notice to the company following its April 2020 decision to wind up six debt schemes having Rs 25,000 crore of assets under management (AUM) from 3 lakh investors, citing liquidity challenges because of the pandemic.

The company eventually was asked to pay Rs 5 crore as penalty, return over Rs 450 crore collected as 22-month investment management and advisory fees, and was banned from launching new debt schemes for alleged irregularities in running the six debt schemes.

The Chennai police economic offences wing (EOW) subsequently registered an FIR to probe these alleged irregularities. The ED case of money laundering stems from this complaint.

In 2021, the Sebi restricted the heads of the asset manager — Vivek Kudva and Roopa Kudva — from accessing the securities market and from buying, selling or otherwise dealing in securities, directly or indirectly, or being associated with the securities market in any manner, whatsoever, for a period of one year. 

According to news reports, a spokesperson of Franklin Templeton said, "We continue to cooperate with all regulatory and statutory authorities and provide all data and information required by them. Franklin Templeton places great emphasis on compliance with regulations, and we have appropriate policies in place, consistent with Indian regulations and global best practices."

The Securities and Exchange Board of India (Sebi) in June 2021 barred Franklin Templeton Asset Management (India) from launching new debt schemes for two years and imposed a penalty of Rs 5 crore for violating regulatory norms in the winding up of six debt schemes in 2020. The Sebi said it had found that Franklin Templeton committed serious violations with relation to the six schemes.

The market watchdog directed the fund house to refund investment management and advisory fees of over Rs 512 crore (including interest) collected with respect to the six debt schemes.