கருப்பு பண விவகாரத்தில் திடீர் திருப்பம் : 289 பேர் கணக்கில் பணம் காணோம்

தினகரன்  நவம்பர்  7, 2014

புதுடெல்லி: வெளிநாட்டு வங்கியில் கணக்கு வைத்துள்ளதாக மத்திய அரசு அளித்த 628 பேர் பட்டியலில், 289 பேர் கணக்குகளில் பணம் இல்லை எனவும், 122 பெயர்கள் இரு முறை இடம்பெற்றுள்ளதாகவும் சிறப்பு புலனாய்வு குழு (எஸ்.ஐ.டி) அதிகாரிகள் அதிர்ச்சி தெரிவித்துள்ளனர். 

இதனால் மத்திய அரசு தாக்கல் செய்த பட்டியல் சந்தேகத்தையும், ஏமாற்றத்தையும் ஏற்படுத்தியுள்ளது. வெளிநாட்டு வங்கிகளில் கணக்கு வைத்திருந்த தொழிலதிபர்கள் பிரதீப் பர்மன், ராதா டிம்ளோ, பங்கஜ் சிமன்லால் லோதியா ஆகியோரது பெயர்களை உச்சநீதிமன்றத்தில் மத்திய அரசு கடந்த மாதம் 27ம் தேதி தாக்கல் செய்தது.

 மற்றவர்கள் மீது விசாரணை நடப்பதாகவும், வரிஏய்ப்பு செய்ததற்கான ஆதாரங்கள் இருந்தால் மட்டுமே அவர்களது பெயர்கள் தெரிவிக்கப்படும்.

 அதனால் கருப்பு பணம் பட்டியலில் உள்ள அனைவரது பெயர்களை தாக்கல் செய்யும் படி, ஐ.மு. கூட்டணி அரசுக்கு உச்சநீதிமன்றம் முன்பு பிறப்பித்த உத்தரவில் மாற்றம் செய்ய வேண்டும் என மத்திய அரசு தெரிவித்தது. இதற்கு கடும் கண்டனம் தெரிவித்த தலைமை நீதிபதி எச்.எல்.தத்து தலைமையிலான பெஞ்ச், ‘‘வெளிநாட்டு வங்கிகளில் கணக்கு வைத்திருப்பவர்களை பாதுகாக்க நீங்கள் குடை பிடிக்க வேண்டாம். பட்டியலில் உள்ள அனைவரது பெயரையும் எங்களிடம் கொடுங்கள். எஸ்.ஐ.டி விசாரணைக்கு நாங்கள் உத்தரவிடுகிறோம்Ó‘ என கூறியது. 

 இந்த கடுமையான உத்தரவை அடுத்து சுவிட்சர்லாந்தில் எச்.எஸ்.பி.சி வங்கியில் கடந்த 2006ம் ஆண்டு கணக்கு வைத்திருந்த 628 பேரின் பட்டியலை மத்திய அரசு கடந்த மாதம் 29ம் தேதி தாக்கல் செய்தது. 

அந்தப் பட்டியலை நீதிபதி எம்.பி.ஷா தலைமையிலான எஸ்.ஐ.டி விசாரணைக்கு உச்சநீதிமன்றம் அனுப்பியது. இது குறித்து வருமானவரித்துறை அதிகாரிகள் உதவியுடன் எஸ்.ஐ.டி 150 விசாரணை மற்றும் ஆய்வுகளை மேற்கொண்டது. அதில் பல அதிர்ச்சி தகவல்கள் வெளியாகியுள்ளன. 

மத்திய அரசு தாக்கல் செய்த பட்டியலில் 289 பேரின் கணக்குகளில் ஒரு பைசா கூட இருப்பு இல்லை என்பது எஸ்.ஐ.டி விசாரணையில் கண்டுபிடிக்கப்பட்டுள்ளது. மேலும் 122 பேரின் பெயர்கள் இரு முறை அச்சிடப்பட்டுள்ளது. 

பட்டியலில் மீதம் உள்ளவர்கள் எப்போது வங்கி கணக்கு தொடங்கினர், 

அவர்களின் பண பரிவர்த்தனை பற்றி எந்த விவரமும் இல்லை. இதனால் வெளிநாட்டு வங்கியில் கணக்கு வைத்திருப்பவர்கள் மீது நடவடிக்கை எடுப்பதில் எஸ்.ஐ.டி.க்கு பெரும் முட்டுக்கட்டை ஏற்பட்டுள்ளது. 

உச்சநீதிமன்றத்தில் மத்திய அரசு தாக்கல் செய்த பட்டியல் பெரும் சந்தேகத்தையும், ஏமாற்றத்தையும் ஏற்படுத்தியுள்ளது. இந்த விசாரணையை எஸ்.ஐ.டி வரும் மார்ச் மாதம் இறுதிக்குள் முடிக்க வேண்டும் என உச்சநீதிமன்றம் கெடு விதித்துள்ளது. இன்னும் 300 பேரிடம் எஸ்.ஐ.டி விசாரணையை தொடங்க வேண்டும். இரட்டை வரி விதிப்பு தவிர்ப்பு மற்றும் வரித்தகவல்களை பகிர்ந்து கொள்ளும் ஒப்பந்தம் செய்யப்பட்ட நாடுகளுடன் மீண்டும் பேச்சுவார்த்தை நடத்தி கூடுதல் தகவல்களை பெற்றுத் தரும்படி மத்திய அரசிடம் எஸ்.ஐ.டி வேண்டுகோள் விடுத்துள்ளது.

இந்த நடவடிக்கைகளை ஏற்கனவே தொடங்கி உள்ளதாகவும், 75 நாடுகளிடம் மறு பேச்சுவார்த்தை நடத்தப்பட்டுள்ளதாகவும் எஸ்.ஐ.டி.யிடம் நிதித்துறை அமைச்சகம் கூறியுள்ளது. 

புதிய முறை

சுவிஸ் வங்கியில் கணக்கு வைத்திருப்பவர்கள் தாங்களாகவே அந்தந்த வங்கிகளில் தகவல்கள் பெற்று வருமான வரித்துறையிடம் அளித்தால், வரி சட்டத்தின் கீழ் குறைவான தண்டனை கிடைக்கும் வழக்குகள் பதிவு செய்யும் புதியமுறையை மத்திய நேரடி வரிவிதிப்பு வாரியம் (சிபிடிடி) பின்பற்றுவதாகவும் எஸ்.ஐ.டியிடம் மத்திய அரசு தகவல் தெரிவித்துள்ளது. 

இச்சலுகை வெளிநாட்டு வங்கியில் கணக்கு வைத்திருக்கும் 100 பேருக்கு அளிக்கப்பட்டுள்ளது. 

வெளிநாட்டு வங்கிகளில் கருப்பு பணம் வைத்திருப்பவர்கள் மீது அமலாக்கப் பிரிவின் நிதி மோசடி சட்டத்தின் கீழ் கடும் நடவடிக்கை எடுக்கப்பட வேண்டும் என எஸ்.ஐ.டி விரும்புகிறது.

 அதனால் அமலாக்கப் பிரிவில் காலியாக உள்ள இடங்களில் திறமையான அதிகாரிகளை பணியமர்த்தி கருப்பு பணம் மீட்பு நடவடிக்கையில் ஈடுபடுத்தவும் எஸ்.ஐ.டி முயற்சி எடுக்கிறது.

Black money in Swiss banks: Why even a determined PM Modi might just fail

FP Staff  Jul 7, 2014 11:45 IST

The BJP has long declared its determination to bring back 'black money' to the country.

The issue was a prominent part of the party's successful Lok Sabha campaign, and newly elected Prime Minister Narendra Modi was so keen to display the seriousness of his intent that he quickly instituted an SIT with the express purpose of hunting down and returning the black money from offshore tax havens and 'Swiss bank accounts'

However, both the SIT itself and the government's plan may have hit a brick wall  that threatens to bring all its efforts to naught.

Last month, newspaper reports announced with great confidence that Switzerland had prepared a list of Indians suspected of stashing un-taxed wealth in Swiss banks and were ready to share it with the Indian government. Today comes news in the Economic Timeshowever that such a list does not in fact exist.First up, there is no 'list' of Indians with illegal offshore accounts.

The earlier report by the PTI news agency quoted an unnamed senior Swiss government official as saying that the "names of these Indian individuals and entities have come under scanner of the Swiss authorities during an ongoing exercise to identify real beneficiary owners of funds held in various banks operating in Switzerland".

Following the publication of the report, Finance Minister Arun Jaitley said the government would write to Switzerland seeking details of these Indians. He admitted, however, that his ministry was yet to receive official communication in this regard. As it turns out now, it was for good reason.

Meanwhile Justice MB Shah, who is heading the SIT on black money, was also eager to examine the so-called list.

"It isn't a list of only black money, it is a list of those persons who are also legally vested. It is a combined list. We are asking for the list of the said persons. Then we will verify. Then action is taken. If it is legal we cannot do anything, If it is illegal or unaccounted money then we take action. It depends on which manner the amount is deposited," Shah told CNN-IBN.

However, Mario Tuor, head of communications, SIF, tells ET Magazine, "The letter from Indian authorities asks for additional information on a list prepared by the Swiss authorities. We cannot give information on a non-existing list."

ET adds that Switzerland has long been refusing to share details about the Indians named in a so-called 'HSBC list', which contains names of Indian and other foreign customers who have stashed their black money in its Swiss branch. According to the report:

"This was stolen by a bank employee and later found its way to tax authorities in various countries, including India. To this, Tuor said there is no global standard to provide assistance based on information illegally obtained"

India has amended the terms of its Double Taxation Avoidance Agreement (DTAA) with Switzerland to ensure that it receives information on banking in addition to taxes,  and  the Swiss government has asserted that it is"looking forward to working together with the new government of India in its fight against tax evasion." But the lack of progress makes clear, much of this means little in terms of actionable information.

So the 'breakthrough' that was being trumpeted has turned out to be yet another mirage.

Then there are those who argue that getting the Swiss to cough up the names of black money offenders is hardly worth the effort.  In an interview with the Times of India, Professor Arun Kumar, an expert on black money points out that while 'black money' is a reality, the bulk of it is right here in India and not overseas.

"First of all, I think going after just the foreign component of black money is a diversion. The bulk of the money is right here in the country! It is very difficult to get money out of foreign tax havens unless someone has been really stupid. Let me clarify that all Indians with foreign accounts are not criminals", he said.

Professor Kumar added that any 'list' of Indians given by the Swiss (or for that matter any other) government was also likely to be highly misleading, as it was unlikely that the accounts would be opened under the real names of the account holders.

"No amount of agreements to avoid double taxation or information sharing will yield information on real account holders. There are devious means by which money is transferred through several layers of shell companies. If you ask a Swiss bank, they might tell you the 'names' they have but these are not the real people. It will require a great deal of meticulous work here to get the right persons. This is what the US did in the case of its citizens who had stashed money in UBS. They prepared a case in US and presented it to the Swiss. That's what India should do."

That would be one step. The other would be, as Kumar points out, to start tracking and recovering the vast hoards of black money being stored closer to home -- usually in that glitzy new real estate development coming up in your neighbourhood.

Swiss money trail: From gold and diamond to stocks and bitcoins

PTI :Goodreturns Monday, June 30, 2014, 10:02 [IST]

As Switzerland commits to cooperate in India's fight against black money, a new strategy of 'layering' through gold and diamond trade has come to light at Swiss banks to thwart any attempt for identification of real beneficiary owners of funds entrusted with them.

The activities and avenues being used for such 'layering' include diamond trade, gold and other jewellery exports, stock market transactions through use of complex funds, as also the fund transfer through new-age virtual currencies like bitcoin.

At a time when Switzerland has been facing intense pressure to act on the alleged use of Swiss banks for stashing black money by Indians, the government data of the Alpine nation shows that India has become the top destination for its gold exports with trade worth close to 6 billion Swiss francs (about Rs 40,000 crore) since the beginning of this year.

According to government and Banking sources, there is a growing suspicion that a portion of gold and diamond trade is being used to route funds from Swiss banks to India and other destinations.

At the same time, the banks in Switzerland are now getting an undertaking signed by their clients, where the customer agrees to take responsibility for any possible regulatory or administrative compliance with international norms.

The development regarding alleged use of diamond and gold trade, as also stock market transactions and bitcoins, for layering of black money comes at a time when there has been an intense debate about Swiss authorities' assistance in India's fight against black money, which has been a politically sensitive issue in the country.

A senior Swiss government official recently said that Switzerland was ready to help India with data under its 'spontaneous information exchange' initiative on a proactive basis, although the European country continues to resist any information-sharing on requests based on 'stolen data'.

The statement triggered a major debate and Switzerland's Secretariat for International Financial Matters (SIF) issued a public statement on this matter. Some reports went on to suggest that Swiss authorities have already shared a list of Indians alleged to have stashed black money, but any such development was denied by both the government.

When contacted, SIF spokesperson Mario Tuor confirmed that the Swiss authorities "are in contact with the Indian government", but refused to share further details.

In reply to emailed queries, Tuor said that Switzerland is looking forward to working together with the new government in India in its fight against tax evasion.

Tuor, however, refused to comment on his reported remarks that Switzerland has not shared any list with India, neither it was preparing one for sharing with the Indian authorities.

The other routes being tapped by some Swiss bankers and their clients for 'layering' of their funds include art works, as also virtual currencies, they added.

'Layering' is generally second stage of money laundering process and this involves moving illicit Funds around the financial system through a complex series of transactions to complicate the paper trail.

This 'layering' typically takes place between the first stage -- 'placement' of blackMoney in the financial system either in cash vaults, or through a series of cash or sham financial transactions -- and before the final 'integration' stage when money is put back into the financial system through various transactions for the benefit of its final recipient.

The latest data compiled by Switzerland's Federal Customs Administration (FCA) shows that exports to India of gold, silver and coins to India has been rising consistently since January this year (981 million Swiss francs) and reached 1.2 billion Swiss francs (about Rs 8,000 crore) in May 2014.

Moreover, India accounted for over 32 per cent of entire Swiss exports of such items during May, up from just about 14 per cent at the beginning of this year. In the process, India has overtaken China as biggest destination for Swiss gold exports. Interestingly, Switzerland's overall gold export figures have fallen in recent months, but exports to India are rising.

Under global pressure, Switzerland decided earlier this year to provide country-wise breakdown of its goldtrade.

The Financial Action Task Force (FATF), a global financial crimes combating body, had also said in one of its recent reports that India is one of the five countries where instances have been found that trade accounts of diamond business are being used to launder illegal funds.

Switzerland is also in the process of easing its various regulations, including those related to sharing of information with foreign jurisdictions in cases of suspected tax evasion and other financial crimes.

When asked whether India would be a beneficiary for automatic information exchange once a revised Tax Administrative Assistance Act comes into force in August, SIF spokesperson declined to give any direct answer and said it would depend on various developments within the country.

"Switzerland is actively taking part in international efforts aimed at better combating tax fraud and evasion such as the development of a worldwide standard for automatic exchange of information. Like India, Switzerland has endorsed the declaration on automatic exchange of information..." Tuor said.

On specific query that whether India would benefit, the spokesperson said that Switzerland would first wait until the new global standard on automatic exchange in tax matters has been defined by the OECD and accepted by the G20.

"Secondly, the Swiss government will propose how to implement the new standard in Switzerland. Thirdly, the Swiss parliament will decide on the government's proposals... I can't give you any further details," Tuor said.

India has not received information on Swiss 'black money': Finance minister

Reuters -Buysiness :NEW DELHI Mon Jun 23, 2014 4:29am EDT

 The Indian government has not received any communication from Switzerland about "black money" suspected to be stashed in Swiss banks, India's finance minister Arun Jaitley said on Monday.

Jaitley's comments followed media reports that Switzerland has prepared a list of names of Indian account holders who they suspect of not paying taxes. Jaitley said he was writing to the Swiss authorities for more information.

(Reporting By Manoj Kumar; Writing by Sruthi Gottipati; Editing by Frank Jack Daniel)

Black money will remain untouched

Gautam Nayak  Live Mint 12 Feb 2014

The recent decision of the Reserve Bank of India (RBI) to phase out certain old currency notes seems to have created some fear in the market as to whether this was a method of unearthing black money, according to newspaper reports. Some reports referred to money moving into immovable properties, gold, etc., as a reaction to RBI’s decision. Are these fears justified and what are the provisions of tax laws relating to unexplained cash found in one’s possession?

The tax law provides that if a person is found to be the owner of any money, bullion, jewellery or other valuable article in a particular year, the amount or asset should either be recorded in her books of account, or she should be in a position to explain the nature and source of its acquisition. If it is not recorded in the books of account and the person is not able to explain in a satisfactory manner as to how she acquired the money or asset, the value of the money or asset can be treated as her taxable income.

This would mean that such an amount would get added to her regular income as undisclosed income. However, income tax would have to be paid on such undisclosed income at a flat rate of 30%, irrespective of whether the person has any other taxable income or not. No deduction for any expenditure would be allowable to the person concerned against such undisclosed income, nor can she set off any losses against it. Therefore, in effect, 30.90% of such an amount or the value of such an asset would end up being paid as income tax.

Would the RBI move result in taxation of such undisclosed cash? If one looks at the RBI announcement, it is clear that the old currency notes can be exchanged for new ones at any bank branch from April to June 2014 without any questions being asked as to the name of the person giving the notes, her Permanent Account Number (PAN), address, etc. One can exchange the notes even at branches where one does not have a bank account. It is only after 30 June that one would have to give the name and PAN to exchange high denomination currency notes. Therefore, any person having undisclosed cash in her possession can easily exchange the old currency notes till June 2014 without disclosing her identity. Therefore, there is no risk till then of such amounts being taxed.

It is only after June that such an exchange would not be permitted without disclosure of identity. It is obvious that any person seeking to exchange old high denomination currency notes for new at this stage, runs the risk of such amounts being taxed as her undisclosed income, unless she is in a position to prove either that the cash is recorded in her books of account or prove from where she acquired it.

What could be the possible reason for this cut-off date of June 2014? The obvious answer that comes to mind is the fact that elections are being held in April and May, and it is a well-known fact that elections in India involve utilization of a large component of black money. Obviously, politicians would have been severely handicapped in their election campaigning had the cut-off date been prior to the elections.

Is such withdrawal of currency notes the best way of tackling the problem of black money? One needs to understand that the greater part of black money is not sitting idle in the form of cash, but is often deployed in productive assets. Even a holder of black money would not like to forego the income that she could earn on such an amount. Therefore, a significant part of such undisclosed wealth is in the form of assets. These include undervalued real estate, undisclosed gold or jewellery, undisclosed foreign assets held abroad, assets and businesses held in names of close relatives and others, etc. This component of black money would not get affected by the withdrawal of old currency notes or high denomination currency notes.

One already notices that there is a significant change in approach of most of the younger generation, which prefers to pay its legitimate taxes rather than go through the hassle and risk of black money. Black money flourished during the era of high taxes, which prevailed in the 1970s and 1980s. Old habits die hard, and even with the reduced reasonable income tax rates, some taxpayers continue to avoid disclosing their true incomes.

What is now needed is a carrot and stick approach. There is definitely the need for a multi-pronged effort in the form of intelligence gathering and follow up on various leads in a systematic manner, to unearth such undisclosed income and assets, besides a crack down on corruption, one of the major reasons for generation of black money. Such efforts need to be accompanied by rational and stable tax policies, which make tax payment easier and less onerous than the risk involved in not disclosing income and assets. 

StanChart, HSBC officials offering lockers for black money?

FP: FP staff: Cobra :19 June 2013

It seems money laundering won’t see an end in India any time soon.

Even after the Reserve Bank of India (RBI) fined  ICICI, HDFC and Axis banks for flouting customer norms, a recent Cobrapost expose shows how some employees in HSBC and Standard Chartered have also been involved in accepting black money and agreeing to launder it.

According to a CNN-IBN report, HSBC and Standard Chartered officers have been caught in a Cobrapost sting operation, offering to launder money.

Reuters

A Cobrapost undercover reporter posing as a politician’s aide was offered lockers for black money and senior bank officials confirmed on camera that money laundering is a service offered by all.

Reacting to the latest sting operation, HSBC has suspended employees who were seen soliciting black money on camera.

In a statement, the bank said, “HSBC a zero-tolerance policy for breaches of law and regulation and the bank takes seriously any reports or allegations of such breaches. Our employees featured in the (CNN-IBN) news report are on leave pending completion of the investigation. We will take appropriate action, including dismissal, if any employee is found after investigation to have breached the law or our policy.”

Meanwhile, Standard Chartered said it is investigating “failures” in banking standards. The bank said that it will take disciplinary action.

But, there’s a bright side too. According to the report, the Cobrapost expose also showed that a few bank officers refused to accept money when asked to illegally transfer funds from foreign accounts by an undercover reporter.

India lost $123 billion in black money in a decade: Report

IANS  BT  Washington   Last Updated: December 18, 2012  | 00:00 IST

The Indian economy suffered $1.6 billion in illicit financial outflows in 2010, capping-off a decade in which it experienced black money losses of $123 billion.
According to a report by Global Financial Integrity (GFI), a Washington-based research and advocacy organisation, India is ranked as the decade's 8th largest victim of illicit capital flight behind China, Mexico, Malaysia, Saudi Arabia, Russia, the Philippines, and Nigeria.
"While progress has been made in recent years, India continues to lose a large amount of wealth in illicit financial outflows," said GFI Director Raymond Baker.

Titled 'Illicit Financial Flows from Developing Countries: 2001-2010', the report found that all developing and emerging economies suffered $858.8 billion in illicit outflows in 2010, just below the all-time high of $871.3 billion set in 2008-the year preceding the global financial crisis.

"Much focus has been paid in the media on recovering the Indian black money that has already been lost," Baker said, suggesting policymakers should instead make curtailing the ongoing outflow of money priority number one.

"$123 billion is a massive amount of money for the Indian economy to lose," said Dev Kar, GFI lead economist and co-author of the report with GFI economist Sarah Freitas.

FROM THE MAGAZINE: White paper on black money flawed?

"It has very real consequences for Indian citizens. This is more than $100 billion dollars which could have been used to invest in education, healthcare, and upgrade the nation's infrastructure," he said.

A November 2010 GFI report, 'The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008', found that the Indian economy lost $462 billion to illicit financial outflows from 1948 through 2008.

Authored by Kar, the report measured India's underground economy as 50 per cent of GDP, with cumulative illicit outflows accounting for an increasing share of the total underground economy.

The new GFI study also estimates the developing world lost a total of $5.86 trillion to illicit outflows over the decade spanning 2001 through 2010.

The $858.8 billion of illicit outflows lost to all developing countries in 2010 is a significant uptick from 2009, which saw developing nations lose $776.0 billion.

GFI advocated that world leaders increase the transparency in the international financial system as a means to curtail the illicit flow of money highlighted by Kar and Freitas' research.

Black money: India to expand customs overseas snoop network

Money Life :MDT/PTI | 01/10/2012 11:33 AM 

The main area of focus would be expanding the snoop network would be the South East region after authorities found that a majority of illegal goods were originating from there and being smuggled to India using different gateways

New Delhi: India is considering a proposal to expand its Customs Overseas Intelligence Network across Asia for checking cross-border illegal trade and blackmoney besides gathering information on commercial frauds, reports PTI.

A proposal in this regard is under consideration of the ministry of external affairs, sources said.

The network, which functions under the Directorate of Revenue Intelligence under the finance ministry, plays a pivotal role in exchange of information related to cross-border illegal trade.

At present, there are nine Customs Overseas Intelligence Network (COIN) offices in various cities including London and Brussels. The finance ministry has recently approved two COIN offices in China, the proposal which has been agreed upon by the MEA.

“Two COIN offices are yet to be established in China. There has been an in-principle approval on it by the finance ministry and the MEA. The MEA is also looking into the possibility of opening few more such offices in Asian nations. However, no final decision has been taken so far,” a source said.

He said the main area of focus would be South East region which includes Malaysia, Philippines, Cambodia, Singapore, Indonesia and Thailand among others.

The need for expanding the network was felt after authorities found that a majority of illegal goods were originating from these countries and being smuggled to India using different gateways, sources said.

Customs officials have noticed spurt in activity related to Trade Based Money Laundering (TBML) through illegal export to India from South East nations.

“The government is in talks with all the stakeholders.

An appropriate decision will be taken soon,” an official, in the know of the status on the proposal, said.

The sources said the MEA is also considering a proposal to set up 14 new Income Tax Overseas Units (ITOUs) to deal with the menace of black money and keep a tab on illegal routing of funds from abroad and parking of money in foreign countries.

A similar proposal to position liaison officers in some of the countries by CBI is also under consideration of the MEA.

India has already established 10 ITOUs in its missions at Cyprus, France, Germany, the Netherlands, Japan, the UAE, the UK, the US, Mauritius and Singapore.

The ITOUs are manned by tax officers who are designated as first secretaries to maintain effective coordination and liaison between Indian tax authorities and the tax authorities of countries concerned.

These units are mandated to obtain information on tax and financial data of investments made by individuals and institutions in these countries and facilitate exchange of data on legal investment or routing of money in the country and vice-versa.

The Central Bureau of Investigation (CBI) has decided to open its offices in the UK, the US and the UAE to liaise with their law enforcement agencies which would help in execution of its judicial requests on real time basis.

Sources said the MEA is looking into all the proposals by the Customs and the I-T departments and the CBI.

A recent finance ministry report on black money has recommended to expand and strengthened the scope and reach of COIN offices to check suspicious trade transactions.

DRI maintains constant interaction with its Customs Overseas Intelligence Network offices to share intelligence and information through diplomatic channels on the suspected import/export transactions to establish cases of mis-declaration, which are intricately linked with tax evasion and money laundering.

“The scope and reach of COIN offices should be further expanded and strengthened. Customs officers should be stationed in major trading partner countries to liaise with customs authorities of those countries and cause verifications of suspicious trade transactions,” the report has said.

Black-money returning as export receipts

Source : S.Muralidharan:BL:24th Oct 2011

When black money can enter India through over-invoiced exports 

and participatory notes, VDIS will have few takers.

There was a time when exports were given a lot of tax sops — such as duty drawback, cash assistance and income-tax exemption, either full or partial — which tempted unethical businessmen to inflate their exports through over-invoicing or other means. Over-invoicing of imports is done to get a kickback from the obliging suppliers, especially those for whom access to Swiss and other convenient bank accounts is easy and laughably simple. Over-invoicing of sales and its variant, exports, on the other hand, is done to make legitimate the illegal money one has accumulated over the years.

INFLATED OR FAKE EXPORTS

At the height of fiscal indulgence to exports, there was a bizarre story doing the rounds. A crack team of sleuths headed to Dubai on a tip-off and their efforts were amply rewarded when the export consignment to that place from India, worth several crores, turned out to be a heap of rags neatly packed with layers of insulation and other material designed to give it the much-needed verisimilitude, and more importantly to ward off any attempt at opening the boxes!

This was the tip of the iceberg regarding the widespread practice of inflated or fictitious exports with an eye on the hefty tax benefits. Relentless pressure from World Trade Organisation saw the Indian government gradually withdrawing these benefits — sometimes in a phased manner. But the steady weakening of the Indian rupee over the last couple of months coupled with the government's threat to go after those who have salted away their ill-gotten wealth abroad has once again revived the practice of inflated or fake exports. Exports to Bahamas, of all places, has jumped 1000-fold from $2.2 million in 2008-09 to $2.2 billion in 2010-11, bearing out the sneaking suspicion that there is something amiss in the sudden soaring of exports all round.

Export of services lends itself to an easier manipulation of invoices, given the fact that, unlike goods, services are always unknown quantities. Who knows, several Indians may be waiting in the wings ready to proffer advice and consultancy for an exaggerated fee, all designed to bring back, duly laundered, the ill-gotten money stashed away abroad. The Indian government has recently entered into information-sharing agreements on tax matters with several recalcitrant nations allegedly giving sanctuary to crooks and criminals. Bahamas, incidentally, is one of them. India can, therefore, crack the whip and ask to verify whether all these so-called exports were real or fictitious, normal or overstated.

But if it chooses to wink at them, it would appear that it doesn't mind the shenanigans of actual or charlatan exporters in the smug knowledge that, after all, the country is getting precious foreign exchange.

In any case, the revival of the over-invoicing route to money laundering should have dampened sufficiently the enthusiasm of the government in going ahead with Voluntary Disclosure of Income Scheme (VDIS) II that seeks to exclusively address the problem of Indian money stashed away abroad.

Indeed, given this fertile and hassle-free route, no one would seriously consider pressing ahead with VDIS II. Further, a lot of water has flowed down the bridge ever since VDIS 1997 was implemented.

PARTICIPATORY NOTES

The Foreign Institutional Investors' (FII) scheme with its inscrutable Participatory Note (PN) feature enables round-tripping which, shorn of jargon, means Indian black money stashed away abroad coming back in the form of stock market investments, riding piggyback on foreign investors.

Mauritius, too, is a favourite money laundering destination for Indians with black money abroad in view of the tax exemption it confers to a Mauritius resident from tax on capital gains earned in India. With such relatively hassle-free avenues, perhaps not many would take the trouble of availing of the tax amnesty scheme, or its variant, VDIS II, supposedly on the anvil.

Investigation authorities in India have always been stymied in their work when their audit or investigation trail takes them beyond India. But the Indian government should, like the US government, read the riot act to the foreign governments indulging crooks and criminals. Better still, there must be pre-emptory strikes like abrogation of the patently invidious tax treaty with Mauritius and the scrapping of the attractive PN feature of the FII scheme.

The wily captains of industry in India have got for themselves a permanent amnesty scheme by getting written into the Indian income-tax law through the Finance Act, 2011, a hugely concessional tax of 15 per cent on dividend received from foreign companies. The government cannot be seen running with the hare and hunting with the hounds.

(The author is a Delhi-based chartered accountant.)