The concept, known as cloud computing, allows a customer to use distant servers to store and manage data. The service is cost-effective and increasingly becoming popular.
Enforcement agencies investigating white collar fraud are facing enormous resistance from clouds. Indian businessmen, following in the footsteps of multinational companies, have started using web-based services to store incriminating data on foreign servers, keeping them out of reach of probe agencies.
The concept, known as cloud computing, allows a customer to use distant servers to store and manage data. The service is cost-effective and increasingly becoming popular.
After coming to know of this, the finance minister formed a high-level committee to study the Information Technology Act (IT) and suggest amendments that will make it compulsory for firms and individuals to maintain mirror servers in India.
A secret finance ministry report on the subject says, “Enforcement agencies have been finding it difficult to retrieve data stored on servers outside India. Several Indian tax-evaders have also started using this method.”
The problem is not so much with obtaining data, but verifying it. According to the note, “Even if the data is obtained on request, it doesn’t help investigation since it is not possible to cross-check the data which is stored on overseas servers.”
The committee, that is considering amendments to the IT Act includes top officials from the Directorate of Revenue Intelligence (DRI), Customs, Enforcement Directorate, Income-Tax, Serious Fraud Investigation Office and Intelligence Bureau.
According to investigators, multinational companies have information stored in servers in the US, the UK and Australia.
Now, even Indian businessmen and tax evaders are using cloud computing which is freely available on the web. The Bangalore unit of the Directorate of Revenue Intelligence has written about the new concept in its report to the finance ministry.
A senior DRI official in Bangalore said: “It’s a major source of worry. Earlier, we used to find MNCs doing this. “Now, we’ve found evidence to suggest that Indian businessmen are using web-based server facility to store data. This makes the task of curbing white collar fraud all the more difficult.”
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