Indian intelligence agencies have stumbled upon what they say may be a major trade-based money laundering (TBML) scam in the tile-manufacturing hub of Morbi in Gujarat while investigating excise duty evasion by tile makers and traders.

The Directorate General of Central Excise Intelligence (DGCEI) has written to the Financial Intelligence Unit suggesting that banks may have been involved in facilitating the scam.

Financial intermediaries

In an investigation of 50 to 60 tile makers, the DGCEI discovered a network of financial intermediaries able to deposit large amounts of cash into bank accounts.

After the cash had been deposited, funds were withdrawn and the accounts closed in a matter of days.

Bank involvement

This prompted investigators to suspect that banks are involved in the scam.

Investigators have not named the suspected banks, but they have said that they include both state-owned and private financial institutions.

Over- and under-invoicing

Investigators have found over-invoicing of raw material supplies and under-invoicing of sales of finished goods to avoid excise duty.

Meanwhile, large payments for over-invoiced components have allegedly been paid into the short-lived bank accounts of the financial intermediaries.

Categories: Trade Based Financial crimes News