Calls for inter-agency cooperation to monitor India’s trade flows and curb illicit financial flows

The Indian Supreme Court’s Special Investigation Team (SIT) on illicit financial flows (IFFs) has asked the Reserve Bank of India (RBI) to share information on foreign exchange transactions and export and import payments with investigative agencies, including the Enforcement Directorate and the Directorate of Revenue Intelligence.

In a letter to the central bank, SIT says that inter-agency cooperation and the use of RBI data by the investigative agencies will help control and track IFFs and plug gaps in the trade flow monitoring system.

Database coordination

India’s central bank maintains a database on foreign exchange transactions monitoring both inward and outward remittances, another tracks payments for exports while a third database records advance payments for imports.

Chairman of SIT and former Supreme Court judge, M B Shah, has written to the RBI governor asking for the establishment of an institutional mechanism for the central bank to share its data with the agencies.

SIT is also asking for a single agency to be established to coordinate all three databases and distribute relevant information to the investigative agencies.

Curbing IFFs

Shah wants to see RBI data cross-checked with information available elsewhere. This, he says, will help curb IFFs.

In one of its previous investigations, SIT used RBI data to identify 788 exporters who failed to bring back export earnings to India within the time legally allowed, suggesting that some of these earnings have been permanently and illicitly channeled outside India.



Categories: Trade Based Financial crimes News