DRI, SEBI, ED on alert, trade-based money laundering increases by 65 per cent

Securities and Exchange Board of India (SEBI) has decided to check for possible money laundering activities in capital market.

Off late, the Securities and Exchange Board of India (SEBI) has tightened its belt by enhancing surveillance to check for possible money laundering activities in capital markets, to stop any attempts by listed companies and intermediaries to launder investors' money or bring in foreign funds for polls or other illegal activities.

Interesting aspect here is, election or no election, money laundering activities are showing an upward trend in India. The official data till 30 April 2013 available with indiatoday.in shows money laundering has increased significantly every year, over the past few years.

The number of money laundering investigations increased from 798 on 31 December 2009 to 1405 on 15 December 2011, to 1510 on 31 August 2012, to 1530 on 30 November 2012, and 1561 on 30 April 2013. Even prosecution cases have increased.  "From 2009 to 2013, more than 1500 cases of money laundering have come before us, out of that 65 per cent cases are trade-based money laundering," a senior DRI officer said.

Trade-Based Money Laundering (TBML) is not a new but very lethal form of money laundering, which the Government of India is finding very difficult to plug.

The Financial Action Task Force (FATF) has recognised misuse of the trade system as the main method (about 65 per cent) by which criminal organisations and terrorist financiers move money for the purpose of disguising their origins and integrating with the formal economy.

These are legitimate commercial transactions to camouflage laundering activities. "TBML has been growing as an alternative remittance system that allows illegal and unaccounted money with an opportunity to earn and move the proceeds disguised as legitimate trade, " a revenue officials says.

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