Panel to check trade-based money laundering

To curb the menace of illicit fund flows, the government has set up a high level panel that will look into trade-based money laundering activities which particularly involve manipulation of invoices.

Director General (DG) Central Economic Intelligence Bureau (CEIB) will be convener of the committee, which was step 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 device methods to deal with problems on how it happens and develop models and ways of dealing with it," an official said.

This is part of the government's efforts to clamp down on black money generation by Indian entities both within and outside the country.

The committee consists of DG Central Economic Intelligence Bureau (CEIB), DG Directorate of Revenue Intelligence (DRI), Enforcement Directorate, Director Financial Intelligence Unit and CBDT investigation wing.

The official said the committee will develop and crystallise indicators - on what kind of transactions – study and identify red flags if something is wrong.

Besides, it is entrusted with flow of meaningful information among agencies, filtering the information and passing it on to relevant organisation, the official added.

Trade based money laundering is over or under invoicing based on whether some entities want to take money from India abroad or bring illegal money from outside and make it legal.

Secondly, it also involves activity such as money remittances made abroad through banks channels but when the import never materialises.

With liberalisation and expansion of economy, unscrupulous elements have also changed the method of tax evasion and avoidance.

"The world is also now obliterating the distinction between avoidance and evasion," Finance Minister Arun Jaitley said at the inauguration of the 2nd Regional Customs Enforcement Meeting.

"We have entered the world of free trade and the essential pre-requisite of any free trade is fair trade but then when fairness ceases to happen, it is such institution (DRI) (that) step in. There are various reasons why fairness ceases to happen," he added.