Editor’s Note
This report details an ongoing investigation by India’s Financial Intelligence Unit into suspected money laundering activities. Certain export companies are under scrutiny for allegedly using trade with Pakistan, routed through the UAE, as a cover for illicit financial transactions.
India’s Financial Intelligence Unit (FIU) is investigating some export companies. It suspects that these companies are conducting money transactions with Pakistan via UAE routes. These transactions are happening under the guise of goods trade. The investigation has revealed that some companies are using the ‘Cash in Advance’ (CIA) method. CIA means the buyer pays the money even before receiving the goods. Furthermore, some companies are also paying commissions to foreign agents. It is suspected that all this is being done to conceal money manipulation.
Money laundering means concealing money earned through illegal means. Some companies are sending money out of India by showing fake business. Currently, 20 export companies are under watch. The investigation is ongoing, so the official did not provide more details.
The investigation has found that trade in specific types of goods is happening. These include cheap jewelry, semi-precious stones, beauty products, perfumes, dry fruits, and electrical goods.
The official said they have shared this information with other agencies as well. They are trying to find out if these companies have any links to terrorism.
Investigators are looking at transactions from the last 14 months. They suspect that the prices of goods and commissions have been inflated excessively. Also, multiple different accounts have been used to conceal the source of the money.
The official gave an example, stating that the price of a common electrical appliance in the market is 100 rupees. However, it was imported for 8,000 to 19,000 rupees. Similarly, cheap jewelry worth 100-150 rupees was exported to UAE and then to Pakistan for 30,000 rupees.
Nowadays, cross-border cash transactions have become difficult. Therefore, criminals are finding new ways to manipulate money. The official said the government is monitoring money laundering happening through trade worldwide.
Last year, the Directorate of Revenue Intelligence (DRI) conducted an operation in collaboration with Hong Kong. It was found that some companies were importing cheap synthetic diamonds at 100 times the price. They were doing this to send foreign currency out of India.
The investigation also revealed that these companies were exporting diamond-studded jewelry to Hong Kong and other countries at highly inflated prices.
It is suspected that these export houses are involved in money laundering by sending goods to Pakistan under the name of exports to UAE or via UAE. They are illegally transferring money by inflating the prices of goods or using other fraudulent methods.
Such illegal trade causes revenue loss for India. If money laundering is happening in the name of exports, it is harmful to the country’s economy.
Funds raised through illegal trade can be used for anti-national activities or financing terrorism. This can have a negative impact on India’s security. If Indian companies are found involved in illegal activities, it can damage India’s international trade image.