State owned Indian banks refuse to cooperate in massive trade-based money laundering investigation

Three Indian state-owned banks have declined to provide information concerning their overseas operations regarding transactions possibly associated with alleged trade-based money laundering operations at some of India’s leading power companies.

Over-invoicing on a massive scale in the supply of coal to Indian power producers has been under intense investigation by India’s finance ministry and the Directorate of Revenue Intelligence (DRI) since earlier this year (Trade-Based Financial Crimes, 18 April 2016).

Massive scale

At around US$4.5 billion, the scale of the alleged overvaluation of coal imports is massive.

But State Bank of India, Bank of Baroda and UCO Bank have refused to cooperate with the investigation, citing client confidentiality as the reason they cannot assist.

Overseas operations

Sources in the finance ministry reportedly say that Revenue Secretary Hasmukh Adhia is writing to the banks, requesting they cooperate with the ongoing investigation.

Investigators want to examine the activities and accounts of the banks’ operations in Singapore, Dubai and Hong Kong relating to transactions by the power companies involved in the investigation.

Ongoing investigations

The DRI is now said to be investigating 40 companies, including six Adani Group firms, two companies of the Anil Dhirubhai Ambani Group and two Essar Group firms for alleged overvaluation of coal imports from Indonesia between 2011 and 2015.

Reports suggest that the DRI has been unable to complete its initial focus on 25 power companies due to lack of cooperation from public sector banks.

Two private banks have reportedly already submitted documents from their operations in Singapore, Dubai and Hong Kong pertaining to coal imports by Indian power companies.



Categories: Trade Based Financial crimes News