Section 66(2) PMLA Empowers Sharing of Intelligence to Investigate National Security and Terror Financing Offences

Accused No. 2 (Micah Mark) was intercepted at Bengaluru International Airport in possession of 24 international debit cards issued by Truist Bank, USA, under a generic name "Santosh Kumar"

Subsequent searches by the Enforcement Directorate (ED) under the Foreign Exchange Management Act (FEMA) revealed a network involving "The Timothy Initiative," which allegedly funneled approximately ₹92.55 crores into India between 2025 and 2026

The ED alleged that funds were systematically withdrawn via ATMs in regions affected by Left Wing Extremism (LWE/Naxalism) to fund unlawful activities

Invoking Section 66(2) of the PMLA, the ED shared this information with the Karnataka State Police, leading to the registration of FIR Crime No. 202/2026 for offences under the Bharatiya Nyaya Sanhita (BNS) and Sections 13, 17, and 18 of the Unlawful Activities (Prevention) Act, 1967 (UAPA)

The petitioners sought to quash the FIR, arguing the ED lacked authority to trigger a UAPA investigation and that the charges were a "counterblast" to allegations of custodial torture

1. Whether the Enforcement Directorate has the legal authority under Section 66(2) of the PMLA to communicate information to jurisdictional police for the registration of an FIR involving non-PMLA offences, including UAPA

2. Whether the investigation into offences under Sections 13, 17, and 18 of the UAPA should be quashed at the threshold stage due to lack of prima facie material

Section 66(2) of the Prevention of Money Laundering Act, 2002 (PMLA), which mandates that if an authority, based on material in possession, finds a contravention of "any other law," they shall share information with the concerned agency

Section 37 of FEMA regarding search and seizure powers

Section 2(o) of the UAPA defining "unlawful activity," and Sections 13, 17, and 18 of the UAPA, which prescribe punishment for unlawful activities, raising funds for terrorist acts, and conspiracy

Section 528 of the Bharatiya Nagarik Suraksha Sanhita (BNSS) (equivalent to Sec 482 CrPC), emphasizing judicial restraint in interdicting investigations involving National Security

The Court rejected the petitioners' narrow interpretation of Section 66 of the PMLA, ruling that the ED is not restricted to sharing information only regarding PMLA-specific offences; the statute expressly allows sharing information if "any other law" appears contravened

The Court found that FEMA and PMLA must be read in tandem rather than in "watertight compartments," authorizing the ED to report the discovery of a parallel cash economy and suspected terror funding

The Court noted that the ED's dossier detailed a suspicious pattern: over 1,000 debit cards issued under a singular false identity and used for massive cash withdrawals in LWE-affected districts like Bastar

The Court reasoned that at this incipient stage, it is not required to find "guilt" but merely whether "prima facie material" exists to justify an inquiry

Given the allegations of "clandestine funding of extremism," the Court held that the investigation is a matter of National Security and must not be "nipped in the bud"

The Court held that the allegations were sufficiently serious to preclude quashing the FIR at the threshold

The High Court dismissed both Criminal Petitions, refusing to quash Crime No. 202/2026, while granting the petitioners liberty to seek legal remedies if a final report is filed

The Court clarified that its observations were limited to the Section 528 BNSS proceedings and would not bind the ongoing investigation