The Enforcement Directorate (ED) has filed a charge sheet against health and beauty company Amway India Pvt Ltd in a money laundering probe, attaching assets worth ₹757 crore to the company. Amway India is a multilevel marketing company that enrolled thousands of people nationwide in its marketing scheme by paying commissions on expensive cosmetic products in exchange for their recruitment of new members.
The agency further identified proceeds of crime worth ₹4,050 crore in the company. A money laundering probe against Amway India Enterprise Pvt Ltd, which has 5.5 lakh direct sellers across the country, was started in 2011 based on various first information reports (FIR) filed by the Telangana police.
Amway was accused of misleading the public by promising them extremely high commissions or incentives for merely enrolling new members and by asserting that these commissions or incentives would last forever. Amway was allegedly pushing an illegal "money circulation scheme" under the cover of selling goods.
Products being sold by Amway India were used to pass off as multi-level marketing schemes across the country, leading to a massive pyramid fraud. The probe is being carried out under the Prevention of Money Laundering Act (PMLA).
According to the ED's investigation, Amway has been pushing a pyramid scam under the pretense of direct selling. “Instead of selling goods directly to the end consumer, Amway has floated a multi-level marketing 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 the enrolment of members. Once a newcomer is convinced to pay money through someone who has referred him to the company, he/she becomes a representative and to earn a commission, he/she has to enroll new members as the number of persons increases down the line, the ones on top get more commission and more incentives like luxurious tours,” the agency said in a statement on Monday.
It further said that “Amway has been operating a multi-level marketing scheme and money circulation scheme and has collected huge amounts from the subscribers”.
By commission of the scheduled offense of cheating, Amway has generated proceeds of crime totaling ₹4,050.21 crores, ED added.
Referring to the diversion of money by Amway, ED said “ ₹2,859 crores of money collected from the members has been siphoned off and parked in the bank accounts of overseas investors in the name of dividend, royalty, and payments for other expenses”.
Amway declared its dedication to adhering to all laws and regulations. “The prosecution complaint (charge sheet) currently filed by the Enforcement Directorate pertains to the investigation dating back to 2011. 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,” an Amway spokesperson said in a statement.
“We want to reiterate our continued confidence in the Indian legal and judicial system following the due process of law as we pursue our legal rights,” the spokesperson said.
In April, ₹757.77 crore worth of Amway's moveable and immovable properties were attached by the financial crimes inquiry agency. At the time, the Enforcement Department (ED) claimed that Amway had made ₹27,562 crore from its business ventures between 2002–03 and 2021–22. Of this sum, the business gave its distributors and members in India and the US commission worth ₹7,588 crore between 2002–03 and 2020–21.
Image source: Hindustan Times