Amway: ED Files Prosecution Complaint Under PMLA, Company Says Old Investigation

Moneylife Digital Team 20 November 2023

The enforcement directorate (ED) has filed a prosecution complaint against Amway India Enterprise Pvt Ltd before the Metropolitan Sessions Judge cum Special Court (PMLA) at Hyderabad under the Prevention of Money Laundering Act (PMLA). Amway, however, says the complaint filed by ED is related to an investigation dating back to 2011.

In a release, ED says, "Amway has been operating a multi-level marketing (MLM) scheme and money circulation scheme has collected huge amounts from the subscribers. By commission of the scheduled offence of cheating, Amway has generated proceeds of crime totalling to Rs4,050.21 crore."

"ED investigation also revealed that more than Rs2,859 crore collected from the members has been being siphoned off and parked in the bank accounts of overseas investors in the name of dividends, royalty and payments for other expenses. During the investigation, movable and immovable properties worth Rs757.77 crore have been attached by ED in this case," the agency says.

In a statement, a spokesperson of Amway says, "The prosecution complaint currently filed by the ED 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. Since Amway began its operations in India 25 years ago, it has been committed to legal and regulatory compliance and has diligently maintained a culture of compliance and integrity to the present day."

ED initiated an investigation based on various first information reports (FIRs) registered by Telangana police under various sections of the Indian Penal Code (IPC) against Amway and its Directors. The FIRs alleged that Amway has been promoting an illegal money circulation scheme under the guise of sale of goods and has been cheating the general public by promising them very high commissions or incentives through simple enrolment of new members and by claiming that these commissions and incentives would continue in perpetuity.

ED says its investigation revealed that Amway has been promoting a Pyramid scheme in the guise of direct selling. "Instead of selling goods directly to the end consumer, Amway has floated an MLM scheme of members and has introduced many intermediaries in the name of distributors. The scheme does not focus on the sale of products but survives primarily on enrolling of members. Once a newcomer is convinced to pay money through someone who has referred him to the company, she becomes a representative and to earn a commission, she has to enrol new members and as the number of persons increases down the line, the ones on top get more commission and more incentives like luxurious tours."

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