New Delhi: The Enforcement Directorate in its status report submitted to the finance ministry on Thursday on alleged financial law violations by National Spot Exchange indicated that the crisis-ridden bourse may have violated money laundering laws and a few foreign exchange procedures.
The Enforcement Directorate (ED) was one of the two working groups that was looking into the payment crisis on the commodity exchange.
“The ED has finalised its report and submitted the same to the finance ministry. The report speaks about detected violations in a few instances and necessary regulations that possibly were not complied with,” people familiar with the development said.
People with direct knowledge of the matter said once the finance ministry and a panel of secretaries, headed by economic affairs secretary Arvind Mayaram, go through the contents of the report, legal action could be initiated against those involved in the operations of National Spot Exchange (NSEL).
The ED, according to sources, could register cases under the Prevention of Money Laundering Act (PMLA) and may also launch a preliminary inquiry to probe forex violations under the Foreign Exchange Management Act (FEMA).
The ED has prepared the report after obtaining data from the Income Tax department and the Forward Markets Commission (FMC) which have probed and gleaned through the finances of the exchange.
The I-T had conducted surveys on two dozen entities which were involved in the exchange last month. The role of few individuals belonging to NSEL, whose names could not be obtained, figure in the status report.
The other working group probing the same case has been constituted under a deputy governor of the RBI.
The NSEL, promoted by Jignesh Shah-led Financial Technologies (India) Ltd, is facing the problem of settling Rs5,600 crore dues to 148 members/brokers, representing 13,000 investor clients, after it suspended trade on 31 July on the government direction.
The Prime Minister’s Office (PMO) had last month suggested setting up of a special team led by DEA.
The panels were constituted to check possible systemic fallout of the NSEL crisis on the financial system, members of the panel include company affairs secretary, consumer affairs secretary and revenue secretary.