The Enforcement Directorate (ED) has unearthed a mega scam of fraudulent foreign remittances worth Rs 15,000 crore, involving a number of dubious importers. The scam involves importers depositing fake bills of entries (of imports) in banks and remittances are made to unknown people outside India.
"We are investigating the case under the Foreign Exchange Management Act (FEMA)," a top ED official told dna.
Six leading banks -- ICICI Bank, IndusInd Bank, ING Vysya, YES Bank, Kotak Mahindra Bank and Bank of India – were hit by the scam.
"Out of the Rs 15,000 crore of fake bill entries, we have so far established around Rs 4,000 crore. We have asked banks to lodge FIRs against all these importers and the banks have agreed. The transaction happened from 2011 till May 2014," a senior ED official, who is investigating the case told dna.
Most banks chose not to respond to dna's repeated queries.
What was the modus operandi?
As per ED sources, dubious importers submitted forged bills of entry and other import documents to banks with the intent to fraudulently remit foreign exchange. "Multiple duplicates of each bill of entry were made and submitted to different banks to show legitimate imports and to illegitimately remit huge foreign exchange outside India," said sources close to ED.
Who are the importers under ED's net?
Kanika Gems, Charbhuja Diamonds, Sambhav Exports, Keshav Impex, Pulkit Impex and Yogeshwar Diamonds, among others. "We are probing the importers' background and checking with banks if due diligence and KYC were done properly. These fake bills of import might have been used for gold smuggling," a senior official told dna.
Is black money involved here?
"By using these dubious entities, black money in the country is sent abroad, especially to tax havens like Mauritius, British Virgin Islands and Cayman Islands without paying any tax, an Income-Tax official told dna. A couple of days back, a special team of ED officials searched a regional branch office of Uco Bank in Mumbai and Chandigarh and recorded the statements of top officials. So far, it has been found that no due diligence or KYC has been carried out in the advance remittance process of exports, said one ED official.
What's the total worth of fake bills?
ING Vysya Bank has made 735 fake import remittances worth $264.3 million while Kotak Mahindra Bank made 734 fake remittances worth $187.9 million. dna has copies of fake entries made in banks. IndusInd Bank made 275 fake entries worth $88.2 million, and ICICI Bank reported 91 worth around $36.4 million.
Are bank officials also involved in the fraud?
Bank officials are already under ED scanner. "Banks are supposed to share details of suspicious transaction to FIU (Financial Intelligence Unit). But they (banks) have not done so. We are investigating if it is just negligence or part of conspiracy by bank officials," said ED.
What does ED suspect?
"Prima facie, there is clear negligence by some bank officials while dealing with these suspicious importers. We suspect collusion. Once we get strong evidences against these officials, the case details will be handed over to the Central Bureau of Investigation (CBI) for further action," the source said.
What's the ED advice to banks?
Faced with a surge in trade-based money laundering and hawala scams, especially in Mumbai, Delhi and Gujarat, the ED had alerted banks and asked them to be more vigilant while transferring large funds, as reported by dna on November 20, 2014. The directorate had asked banks to plug loopholes and check the growing menace in a meeting attended by top compliance officers and Money Laundering Reporting Officers of banks.
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