India’s Enforcement Directorate (ED) and Central Bureau of Investigation (CBI) have now arrested several people in what is emerging as a massive trade-based money laundering scheme.

State-run Bank of Baroda appears to be at the centre of the scheme in which illegal remittances amounting to the equivalent of some US$900 million have allegedly been channelled from India to Hong Kong.

Investigations

“It is a case of trade-based money laundering where several modules were engaged in registration of shell companies abroad and in Delhi and indulged in fake import and exports,” according to ED’s acting director Karnal Singh.

Singh said that more arrests are likely in the case as the agency is still investigating other cells thought to be involved in the scheme, which appears to be massive.

Bankers and middlemen

Those arrested by ED include several current and former employees of Bank of Baroda and HDFC bank as well as alleged middlemen representing at least 15 shell companies.

The bankers allegedly opened accounts and transferred funds to Hong Kong while the middlemen were involved in the registration of shell companies, making huge foreign remittances and raising fake customs invoices to claim duty drawback.

Massive scale

Investigators reckon that at least 59 companies are involved in the scheme which they say may have been operating for more than a decade.

A joint team of the two agencies had earlier searched Bank of Baroda premises and the homes of the accused.

Bank complaint

The scheme emerged after the ED received a complaint in September from Bank of Baroda following an internal enquiry at the bank.

The bank’s management told investigators they suspected irregular foreign advance remittances worth around US$900 million flowed to Hong Kong and Dubai disguised as advance payments for supposed imports, which were never physically dispatched or delivered.

Categories: Trade Based Financial crimes News