Government forms panel to check trade-based money laundering

NEW DELHI: The government has set up a high-level panel to look into trade-based money laundering activities involving manipulation of export and import invoices in particular, a measure that is part of the efforts to clamp down on generation of black money by Indian entities both within and outside the country.

The director general (DG) of the Central Economic Intelligence Bureau (CEIB) will be the convener of the committee, set up recently, to suggest steps to check trade-based money laundering activities.“A committee has been formed to study modalities of this (trade-based) money laundering and devise methods to deal with problems on how it happens and develop models and ways of dealing with it,” an official said.The committee comprises the DG of the CEIB, DG of the Directorate of Revenue Intelligence, Enforcement Directorate, director of the Financial Intelligence Unit and the investigation wing of the Central Board of Direct Taxes.

The official said the committee will develop and crystallise indicators on the kind of transactions to study and flag if something is wrong.

Besides, it has been entrusted with flow of meaningful information among agencies, filtering the information and passing it on to the relevant organisation, added the official, who did not wish to be identified.

Trade-based money laundering typically involves over or underinvoicing based on whether some entities want to take money from India abroad or bring illegal money from outside and make it legal. It also involves activity such as money remittances made abroad through banking channels when the import never materialises.

'Tax Evasion Must Be Curbed'

Finance Minister Arun Jaitley has asked revenue intelligence agencies to enhance cooperation with their global counterparts to effectively check tax evasion and smuggling. "World is obliterating the distinction between tax evasion and tax avoidance…,” Jaitley said, while inaugurating the second regional customs enforcement conference, organised by the directorate of revenue intelligence on Thursday.

Revenue intelligence officials must increase global cooperation to check tax evasion and smuggling, he added. Effective steps to curb tax evasion and avoidance are necessary to ensure that "free trade remains fair trade", Jaitley said.“In an era of free trade and trade liberalisation, there is a need for global and international cooperation and sharing of intelligence information among countries, especially among the neighboring ones, in order to control the illicit movement of goods across border,” he said.

The dynamics of revenue intelligence would continue to evolve with changing times, the minister said. Officers need to be trained in order to read between the lines and be fully equipped to handle the latest technology tools to keep pace with the techniques used by the tax evaders, Jaitley added.