India seeks out shell companies in efforts to curb illicit fund flows

Nearly 13,000 apparently dormant companies are being examined by India’s Corporate Affairs Ministry (CAM) amidst the government’s efforts to clamp down on illicit fund flows through shell companies.

Reports say the ministry has issued notices to the companies, asking them to explain why their registration should not be cancelled.

Failed submissions

According to the ministry, the companies have failed to submit required regulatory filings that would prove they are legitimate trading businesses.

The notices have been issued under the section of India’s Companies Act that contemplates the striking off of companies on certain grounds.

Under this section of the act, companies that fail to make a satisfactory response to the notice will be deregistered.

Suspected money laundering

The ministry’s latest move underlines its intent to examine shell companies suspected of being used for money laundering activities.

Companies that have not commenced trading within one year of incorporation have received notices.

Notices have also been served on companies that have not traded for at least two continuous financial years and have not applied for dormant status.



Categories: Trade Based Financial crimes News