Steps to Check Inflow of Illegal Money

Reserve Bank of India (RBI) has issued comprehensive instructions/guidelines to banks on Know Your Customer (KYC) norms/Anti-Money Laundering (AML) standards/Combating of Financing of Terrorism (CFT)/Obligation of banks under PMLA, 2002.

Also under PMLA 2002, the reporting entities, including banks, financial institutions and intermediaries of securities market, payment system operators and authorized persons which include Money Transfer Service Providers, Authorized Money Changers etc, are under obligation to file Suspicious Transaction Reports (STRs) to the FIU-IND. After analysis of STRs, the information is disseminated to the appropriate law enforcement agencies for further investigation.

Further, the Government monitors the receipt and utilization of foreign contribution received by any ‘person’ including Non Government Organisations (NGOs) in the country in terms of Foreign Contribution (Regulation) Act, 2010 and the Rules framed thereunder.

In cases of receipt of funds from abroad other than through authorized channels, Directorate of Enforcement takes appropriate action under Foreign Exchange Management Act, 1999.

During the years 2009-10, 2010-11, 2011-12 and 2012-13 (upto 28.2.2013), based upon the investigations conducted, the Adjudicating Authorities under FEMA have issued 945 Show Cause Notices for alleged contravention of the relevant provisions of FEMA relating to the transfer of funds unauthorisedly to the extent of about Rs. 2530 crore.

Apart from above, on the basis of enquiries on the complaints received, 24 cases have been referred to CBI, 10 cases to State Police, 35 NGOs have been placed in Prior Permission category, accounts of 32 NGOs have been frozen, 72 NGOs have been prohibited from receiving foreign contribution and registration of 4138 NGOs have been canceled by Ministry of Home Affairs.

As per the Master Circulated dated 2.7.2012 issued by RBI, and in terms of Regulation 5A of the Foreign Exchange Management (Acquisition and transfer of immovable property in India) Regulation 2000, Foreign Embassy/Diplomat/Consulate General are permitted to purchase/sell immovable property (other than agricultural land/plantation property/farm house) in India subject to clearance from Ministry of External Affairs, Government of India, besides payment of the consideration amount out of funds remitted from abroad through normal banking channels.

This information was given by the Minister of State for Finance, Shri S.S. Palanimanickam in written reply to a question in Lok Sabha today.

Steps to Tackle Black Money Stashed Abroad

The Government has been receiving a number of representations from public, demanding disclosure of the names of black money depositors in banks located abroad.

Since the information received from the Foreign Governments is covered by the confidentiality provisions of Double Taxation Avoidance Agreements (DTAAs) and Tax Information Exchange Agreements (TIEAs), the Indian government cannot disclose such information contrary to the provisions of respective Agreements. Further, the money deposited by Indian entities in foreign bank accounts in respect of which some information may be available, can be said as undisclosed asset/income and consequently these entities can be called as black money depositors only after the conclusion of investigation and due process of law including assessments.

The Government has taken various steps under a multi-pronged strategy which includes creating an appropriate legislative framework; setting up institutions to deal with illicit funds; developing systems for implementation; imparting skills to the manpower for effective action; and joining the global crusade against black money. Legislative measures taken through the Finance Act, 2012 in this regard include introduction of provisions requiring reporting of assets (including bank accounts) held outside the country; reopening of assessments upto 16 years for taxing undisclosed assets (including bank accounts) kept outside the country; strengthening of penal provisions in respect of search cases; expansion of the ambit of tax collection at source (TCS) to cover certain more vulnerable items/sectors. India has been renegotiating its Double Taxation Avoidance Agreements (DTAAs) with other countries to bring the Article on Exchange of Information to International standards, and has also been expanding its treaty network by signing new DTAAs with many other countries and by entering into Tax Information Exchange Agreements (TIEAs) with many tax jurisdictions in its effort to facilitate the exchange of information and to bring in tax transparency. It has also become a member of the Multilateral Convention on Mutual Administrative Assistance in Tax Matters in 2012. Various steps have also been taken to improve intelligence gathering mechanism of the Department. The above steps have equipped the government better in tackling the menace of black money.

This information was given by the Minister of State for Finance, Shri S.S. Palanimanickam in written reply to a question in Lok Sabha today.

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September 2021