ED seizes HDFC Mutual Fund units in money laundering case

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ED seizes HDFC Mutual Fund

Highlights

The Enforcement Directorate has provisionally attached 62,914.316 units of the HDFC Balanced Advantage Fund, with a current market value of approximately Rs 33.1 million.
ED's investigation found that out of the Rs 60 million loan facility raised from Bank of India, Rs 10 million was invested in various mutual fund schemes under money laundering.
The agency filed a prosecution complaint in court on March 28, 2026, indicating increased regulatory scrutiny on banking, mineral trading, and investment channels.

This article was translated from the original. Read the original version by our correspondent here.

Attachment Order and Basis of Investigation

According to information released by the Enforcement Directorate, the Bengaluru unit issued a provisional attachment order on September 1, 2026, under Section 5(1) of the Prevention of Money Laundering Act, 2002. Under this order, 62,914.316 units of the HDFC Balanced Advantage Fund have been attached, with a current market value of approximately Rs 33.1 million.

The investigation began based on an FIR registered by CBI, ACB, Bengaluru. The case involves M/s Akshatha Minerals Pvt. Ltd., its directors, and others, relating to alleged fraud, criminal conspiracy, and use of forged documents.

The investigation revealed that the company, involved in iron ore trading and export, had availed loan facilities of about Rs 60 million from Bank of India by creating equitable mortgages on six properties. Among these, a property in Jayamahal, Bengaluru, was allegedly presented as owned by the late Mrs. Lakshmamma, while fake and forged account records, tax payment receipts, betterment fee receipts, and other revenue documents were submitted to the bank to create the mortgage.

According to the ED, it was on the basis of this property that Bank of India disbursed Rs 30 million.

Money Flow and Regional Impact

The agency's investigation also found that Rs 10 million of the proceeds of crime were transferred from the bank account of M/s Akshatha Minerals Pvt. Ltd. to the Catholic Diocese of Bellary Trust on February 13, 2010. This amount was subsequently invested and reinvested in various schemes of HDFC Mutual Fund.

According to the investigation, the flow of funds remained traceable despite multiple investments and ultimately surfaced as 62,914.316 units of the HDFC Balanced Advantage Fund. The ED stated that the original Rs 10 million has now grown to about Rs 33.1 million, and this gain is also considered proceeds of crime.

The agency has already filed a prosecution complaint in the special court in Bengaluru on March 28, 2026. Further investigation is ongoing, which could lead to stricter regulatory oversight on the use of alleged illicit funds through banking, mineral trading, and investment channels.

In our previous report, we discussed the Enforcement Directorate's action in the alleged DHFL loan fraud and money laundering case, which mentioned the freezing of alleged proceeds of crime worth USD 5.41 million (about Rs 517.5 million) during searches under PMLA. That article also explained how the transaction structure related to the sale of foreign property (UK-based Hurtmore House) and liability adjustments in India exposed money laundering risks.

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