New Delhi: Amid intelligence inputs that militant groups were getting money in small amount through at part-time foreign exchange bureaus, the government was now planning to carry out a crack down and streamline the money arriving in the country from overseas.
The move comes close on the heels of objections raised by the security agencies over the mushrooming of foreign exchange bureaus at every nook and corner, to which Reserve Bank of India officials expressed their ignorance.
At a recent meeting between security agencies, the finance ministry and officials of the Reserve Bank of India, law enforcement and security agencies raised serious concerns at the mushrooming of money transfer agencies, especially an international money transfer company which has its agents in almost every street, official sources said.
RBI officials informed the meeting that permission had been given to the company to have agents and sub-agents like banks, post offices and important financial institutions.
However, they were unable to give an explanation when questions were raised about the appointment of “sub-sub agents” like grocery shop-owners and travel agents. The security agencies expressed fears that such outlets were being used by militants for money transfers involving small amounts, the sources said.
This prompted the RBI to issue guidelines to every bank seeking an up-to-date list of all offices and branches, which were authorised to transact foreign exchange business and details of any change in categorisation of its branches dealing in foreign exchange.
This move was seen as a prelude to streamline the mushrooming of foreign exchange bureaus that have opened up at every nook and corner of the country.
Security agencies had informed the government that militants were using such small time bureaus for bringing in money from abroad in small amounts to avoid detection and there was no mechanism in place to seek information from these small-time exchanges and that there was no proper compilation of records.
The security agencies have also expressed their reservations on the Prevention of Money Laundering (PMLA) Act saying its implementation was lengthy, time-consuming and not beneficial in curbing financial transactions by militants as it does not cover proceeds from terrorist acts.
The PMLA, which came into force in 2005, is aimed at preventing the funding of terrorism, but law enforcement agencies have faced difficulties in implementing it, the sources said. It was expected to provide necessary legal framework for tackling the funding of terrorists, but certain provisions of the law have rendered its application “difficult”, sources said.
“The PMLA carries no allusion to proceeds of terrorism or the punishment connected to any such offence, especially when the Unlawful Activities (Prevention) Act does not find a place in the schedule of the PMLA,” said a source.