Private Eyes to Probe Black Money

ET-04 JANUARY 2017, WEDENSDAY. Pg. 01 & 14.

January 04 2017 : The Economic Times (Mumbai)

Private Eyes to Probe Black Money

The income tax department has roped in forensic experts from three of the Big Four accounting firms to investigate suspected money laundering by politicians, bureaucrats and businessmen, say sources.



Pg. 14.

January  04 2017 : The Economic Times (Mumbai)

Private Experts to Study Black Money Data

Mohit Bhalla

New Delhi

I-T dept ropes in experts from EY, KPMG and PricewaterhouseCoopers to investigate suspected money laundering after govt's note-ban move

The income tax department has roped in forensic experts from three of the Big Four accounting firms to investigate suspected money laundering by politicians, bureaucrats and businessmen, people directly aware of the matter said.

Experts from EY, KPMG and PricewaterhouseCoopers are working with tax officials to examine evidence collected by the department during raids conducted since November 8, when the government declared war on black money by demonetising 500 and 1,000 currency notes.

Some of the people raided are suspected to have laundered money through accounting manipulations or brought in money parked overseas through the hawala route, a person involved in the investigations said, speaking on condition of anonymity. The department sought help from external investigators with the expertise to unravel such complex transactions.

“Offenders may have used innovative ways to deposit unaccounted money by disguising receipts or transfers of funds as legitimate transactions,“ said Rajiv Singh of Nalanda Law Associates. “But the existence of a money trail significantly increases the prospects of gathering incriminating evidence that could be used to prosecute them.“ Post demonetisation, the high-profile people the I-T department raided included Bahubali producers Shobu Yarla gadda and Prasad Devineni, two Karnataka government engineers alleged to be close to Chief Minister Siddaramaiah and, more recently, the chief secretary of Tamil Nadu.

Spokespersons for EY, ned to comment when contacted by ET. In an emailed response, the commissioner of investigations at the Central Board of Direct Taxes, Ramesh Kumar Yadav, said: “Personally, I am not aware of any of the issues you wish to know.“

People aware of the matter said the investigators were adopting a multi-pronged approach, which included scrutiny of the books of corporate entities linked to these individuals as well as data stored in computers seized during the raids, examination of bank statements and gathering of field intelligence to identify the authenticity of counter-parties with which transactions were recorded.

The IT department has intensified its enforcement operations since demonetisation on November 8, conducting as many as 556 surveys and 245 searches between November 9 and December 29, ET reported on Monday.

More than 5,000 notices have been issued so far for verification and about 228 cases have been referred to the Central Bureau of Investigation. Total currency seizures amount to Rs 467 crore, of which new notes were over Rs 105 crore.

The government has also been urging people to provide information on presumed financial wrongdoing that they are aware of. Authorities were able to conduct raids on hoarders due to the tip offs from common people, it has said.

The government has also announced an amnesty scheme to encourage tax evaders to make disclosures following the deposit of old notes to a level that's almost equivalent to the amount demonetised, contrary to earlier expectations.

Pg. 20.

Jan 04 2017 : The Economic Times (Mumbai)

Many Speedbreakers on Digital Highway



The Indian government seems to be in a hurry to get the entire population of over 125 crore on the digital platform, but the road seems to be bumpier than expected with many twists and turns and 2017 will be the litmus test for the government on that front.

After announcing that the country needs to shift to a digital payments platform, the government realised that a major chunk of administrative payments are still being done in cash. Now from pushing government departments to switch to digital means to offering a host of benefits for digital payments to retail customers, the government seems to be in a mood to go the extra mile to make `Digital India' a reality.

Industry insiders say that at present more than 95% of transactions happen in cash, if this number reduces even by 20 percentage points, that would mean a huge shift and one can declare the gov ernment's efforts a success.

India is a country where 94% of the population is supposed to be in the unorganised sector which draws its payments in cash. As per reports, only 10% of the population has ever used non-cash means of payments. Though India is the fastest growing smartphone market in the world, only 74% of its people have an active mobile subscription.

The biggest hindrance to a digital economy is there being a huge in formation asymmetry between financial services providers and the consumers. This causes consumers ending up compromising the safety of their accounts and not realising their full potential.

Though as part of the JAM trinity (Jan Dhan, Aadhaar, Mobile), the government not only opened accounts for every household, it is also pushing to make them operational by transferring subsidies to such accounts. But many showing no deposits or transactions reveal that the country still has a long way to go to imbibe the idea of banking.

Will 2017 see such shifts happening drastically? Will Aadhaar finally be able to take over from being only a repository of data to actually being used to authenticate transactions? Will the SMEs and merchant outlets look at cash transactions from the angle of convenience rather than tax avoidance? Perhaps yes. 2017 will reveal whether Modi's gamble pays off.

Pg. 21.

Jan 04 2017 : The Economic Times (Mumbai)

Debt Recovery: SC Wants Info on Large Borrowers

Samanwaya Rautray

New Delhi:

Seeks info on cases pending for over 10 years & involving recovery of over Rs 500 cr

The Supreme Court on Tuesday asked the government to explain whether it had placed adequate manpower at the disposal of the debt recovery tribunals (DRT) and their appellate bodies to timely dispose of cases they are dealing with. It also sought information on all cases that were pending for over 10 years and those which involved recovery of more than 500 crore.

The law has fixed quick timelines for DRTs and debt recovery appellate tribunals to follow, a bench led by outgoing Chief Justice TS Thakur observed. It asked whether any scientific study had been done on the manpower required to enable these bodies to stick to the timelines.

The observation is in line with judicial thinking in recent years. The top court has demanded more staff and resources for subordinate courts to deal with burgeoning litigation load and is currently locked in a standoff with the government over filling up vacancies in the high courts.

The bench noted that as of September 1990, there were more than 15 lakh cases filed by public sector banks in courts and another 304 by other financial institutions seeking to recover money owed to them. These were later transferred to 34 DRTs and five appellate courts functioning under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993. These bodies also deal with cases filed under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002. They have disposed of many cases, but 70,000 cases involving 5 lakh crore are still pending before them, some for over 10 years. Though the law puts a 180-day cap for a case to be decided, the court said, cases remained pending for years.

“Legislative changes to provide for expeditious disposal of proceedings before the Debt Recovery Tribunals may not by themselves achieve the intended object so long as the infrastructure provided to the tribunals is not commensurate with the burden of the work and nature of judicial duties,“ the court said.

It directed the government to file an affidavit whether these timelines can be met with the existing infrastructure, including judicial personnel and staffing. The bench also demanded empirical data on pendency of cases and the list of corporate entities where the amount outstanding was in excess of 500 crore.

The government had earlier agreed to hand the information over to the court in a sealed cover. The affidavit has to be filed in four weeks, the court said in an order passed in a case filed by NGO Centre for Public Interest Litigation against Housing and Urban Development Corporation. The court had earlier demanded to know in this case whether the government was doing anything to address the non-performing assets of banks. On Tuesday, it clarified that a committee set up to examine this could go on with its work.

TOI-04 JANUARY 2017, WEDESNDAY.

Jan 04 2017 : The Times of India (Mumbai)

Banks step up reporting of 'suspicious transactions'

Sidhartha & Surojit Gupta

New Delhi

TNN

Alerts By Some Pvt Lenders Go Up 10 Times After Demonetisation

Facing pressure from tax and enforcement authorities, banks are not taking any chances in reporting “suspicious transactions“ with some of the private players reporting an increase of up to 10 times. Sources said that a private bank, which used to report around 275-300 transactions a month, saw the number for Suspicious Transaction Reports (STR) filings with the Financial Intelligence Unit rise to almost 3,000 during December. Another large bank said that it had seen a seven to eight-fold jump in STRs which were typically made for cash deposits of over Rs 1crore.

An executive at one of the largest banks said that the number of filings had increased as there were several more alerts in the wake of increased surveillance from tax authorities. “We are being extra cautious. The number of cases that we used to report in a month, we are now doing in a week,“ said the senior bank official, who did not wish to be named.

The enforcement directorate and the tax department have been closely tracking the deposit of old Rs 500 and Rs 1,000 notes--especially in private banks-and have also arrest five executives on allegations of illegally helping people convert black money .

A series of action, which included ED visiting 50 branches of 10 banks, some of the very prominent that see large transactions. Separately , 547 branches have been identified by tax authorities for heightened scrutiny as they saw abnormal activity compared to the average daily business undertaken by them earlier. The repeated queries and surveys from the agencies prompted the banks to increase the “alerts“. A banker said that various parameters were used for generating the alerts with the non-KYC compliant being one of the key triggers. Similarly , banks looked at the transaction history as one of the other criteria. “If there was a dormant account or one where the volume was very low and suddenly it saw a spurt in the form of large deposits, we decided to play it safe and report it to FIU. We are not taking any chances,“ said an executive.

“Basically , any transaction which we think is suspicious is being reported. We do not want to face the blame,“ said a bank executive. The government is analysing data on bank deposits and tallying it with tax returns in a bid to go after those who may have sought to use demonetisation as an initiative to deposit unexplained cash.