$700 million sent out of India through 'legal hawala'. Must Read.
The Enforcement Directorate (ED) recently seized Rs 83 lakh from a bank locker in south Mumbai. It is one of three cases the agency is investigating for suspected hawala-type transactions using the country's banking system. It believes that money running into thousands of crores is illegally sent abroad either as advance remittance for import of goods or by using forged import documents submitted to banks. As a result, the country suffers substantial loss of foreign currency.
In the three cases under investigation, a total of $700 million (about Rs 4,400 crore) was sent out of the country, mainly to trading hubs like Dubai and Hong Kong, in the last six months. The ED suspects the actual amount could be three times that detected. The accused took advantage of lacuna in the banking system to commit the fraud and there is no strong law to deal with the matter. Money, most often obtained illegally, is being sent abroad through normal banking channels.
Fake companies are registered and accounts opened in leading banks and co-operative banks. Cash is first deposited in the co-operative banks and transferred from account to account several times to obscure its source. After it reaches a big bank, of course, through an online transaction, payments are made towards advance remittances for imports. Also, fake import documents are produced. It is obvious that the racket cannot be carried out without the connivance of some bank officials.
Money is received abroad by the racketeers foreign partners, who withdraw the sums in foreign currency. Without importing anything, they are making payments in dollars. This is a loss for the country, a loss for India's banks. These registered companies vanish after a certain number of transactions are made and the perpetrators establish new fake companies.
Info @ http://timesofindia.indiatimes.com/india/700-million-sent-out-of-India-through-legal-hawala/articleshow/46534672.cms more
In the three cases under investigation, a total of $700 million (about Rs 4,400 crore) was sent out of the country, mainly to trading hubs like Dubai and Hong Kong, in the last six months. The ED suspects the actual amount could be three times that detected. The accused took advantage of lacuna in the banking system to commit the fraud and there is no strong law to deal with the matter. Money, most often obtained illegally, is being sent abroad through normal banking channels.
Fake companies are registered and accounts opened in leading banks and co-operative banks. Cash is first deposited in the co-operative banks and transferred from account to account several times to obscure its source. After it reaches a big bank, of course, through an online transaction, payments are made towards advance remittances for imports. Also, fake import documents are produced. It is obvious that the racket cannot be carried out without the connivance of some bank officials.
Money is received abroad by the racketeers foreign partners, who withdraw the sums in foreign currency. Without importing anything, they are making payments in dollars. This is a loss for the country, a loss for India's banks. These registered companies vanish after a certain number of transactions are made and the perpetrators establish new fake companies.
Info @ http://timesofindia.indiatimes.com/india/700-million-sent-out-of-India-through-legal-hawala/articleshow/46534672.cms more
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