FinCEN receives 3,201 suspicious activity reports involving Indian entities2 min read . Updated: 21 Sep 2020, 11:42 AM IST
- According to the report, domestic branches of Indian banks have been used to receive or remit the funds; in other cases bank accounts with foreign branches of Indian banks have been used to carry out such suspicious transactions
- A total of 44 Indian banks figure in these files
The US financial watchdog, Financial Crimes Enforcement Network (FinCEN) of the treasury department, has received 3,201 red flags—or suspicious activity reports (SARs)—involving Indian entities for suspected money laundering, terrorism, drug dealing or financial fraud, Indian Express reported on Monday.
This investigative report is a collaborative effort of International Consortium of Investigative Journalists (ICIJ) and BuzzFeed News to trace the Indian entities and banks named in these SARs filed with FinCEN between 1999 and 2017
According to the report, domestic branches of Indian banks have been used to receive or remit the funds; in other cases bank accounts with foreign branches of Indian banks have been used to carry out such suspicious transactions. A total of 44 Indian banks figure in these files.
These banks are named as "correspondent banks" to foreign banks which have raised the red flag with the US regulator.
"Key in this list are Punjab National Bank, Kotak Mahindra Bank, HDFC Bank, Canara Bank, IndusInd Bank and Bank of Baroda, among others," said Indian Express.
"There are a total of 3,201 transactions which have been listed as "suspicious" in nature and these add to $1.53 billion—but this is only those where complete Indian addresses linked to different entities (senders, banks, beneficiaries) are available," it added.
These SARs do not mean "illegality". These are just transactions highlighted for suspicious activities such as alleged round tripping, alleged layering of transactions, weak checks and balances, movement of wealth, alleged tax avoidance and so forth.
These SARs are then shared with enforcement agencies for further action, if any. From India perspective, these if actionable would have been shared with Indian enforcement agencies—Central Bureau of Investigation (CBI), Enforcement Directorate (ED).
FinCEN files lists of Indian entities named in scams such as the 2G scam; the Augusta Westland scandal; the Rolls Royce bribery case and the Aircel-Maxis case, among others. These cases are already under investigation of Indian investigative agencies—CBI, ED and Directorate of Revenue Intelligence (DRI).
"One aspect to be examined is whether these transactions were flagged by Indian banks to Financial Intelligence Unit (FIU). Further, if these transactions were then referred to investigative agencies. We still do not know the full list of these transactions. It is also possible that transactions that raised red flags for foreign banks may not necessarily be applicable to India," said an official with an investigative agency to Mint.
The first set in a series reported by Indian Express includes remittances by Jindal Steel and Power Ltd, transactions involving an IPL team.
"Three different SARs filed by Deutsche Bank Trust Company Americas (DBTCA) regarding funds received and sent by Jindal Steel and Power Ltd (JSPL) red-flag a transaction pattern where it sent money to companies based in Mauritius, Germany, and the UK, and received funds from companies based in Dubai and Switzerland within the same set of days," said Indian Express. Jindal Steel in its reply to Indian Express said these were purely commercial transactions.