The Enforcement Directorate (ED) has unraveled 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.  

Six leading banks — ICICI Bank, IndusInd Bank, ING Vysya, YES Bank, Kotak Mahindra Bank and Bank of India – were hit by the scam.

Few importers like Kanika Gems, Charbhuja Diamonds, Sambhav Exports, Keshav Impex, Pulkit Impex and Yogeshwar Diamonds, among others are under ED’s surveillance. ED’s Officers are delving the importers’ background and checking with banks if due diligence and KYC were done properly. Banks have lodge FIRs against all the importers.

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. The transactions happened from 2011 till May 2014.

It is being doubted that 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.

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.

Prima facie, there is clear negligence by some bank officials while dealing with these suspicious importers. If some strong evidences against these officials comes in limelight then the case details must be handed over to the Central Bureau of Investigation (CBI) for further action.

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.

It is being expected from bank officers that they should be more careful while remitting exchange outside India. But is it really possible for officers to verify the genuineness of each bill presented to them. Or there is actual some lack in verifying process. Be the reason anything but actual loss of revenue is to Government. Through such scams, there is huge leakage of GDP which ultimately affects economy of the country. For this reason, verifying process must be regulated to track the fradulance.

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