Lok Sabha Question No. 2674 (UNSTARRED), answered on 2017-03-17
Subject: Institutional Money Laundering
Ministry: FINANCE
Asked by: BHEEMRAO BASWANTHRAO PATIL

## GOVERNMENT OF INDIA MINISTRY OF FINANCE

## DEPARTMENT OF REVENUE

## LOK SABHA UNSTARRED QUESTION NO. 2674

## TO BE ANSWERED ON FRIDAY, 17 MARCH, 2017 PHALGUNA 26, 1938 (SAKA) Institutional Money Laundering

## 2674. Shri Bheemrao B. Patil.

Will the Minister of FINANCE be pleased to state :

- (a) whether  the  Government  proposes  to  curb  institutional  money  laundering  by  shutting  down dormant companies who carried out high-value transactions and deposited huge amounts of cash in banks following the demonetization and if so, the details thereof;
- (b) whether the  Central  Board  of  Direct  Taxes  has  prepared  an  integrated  data  bank  of  suspected shell companies and entry operators and is in the process of matching recent banking transactions with other suspect dormant companies; and
- (c) if so, the details thereof and if not, the reasons therefor ?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI SANTOSH KUMAR GANGWAR)

- (a) The various aspects relating to  money laundering are within the regulatory domain  of various agencies such as Enforcement Directorate, Economic Offences Wings of the States, Income Tax authorities, etc. under their respective statutes. Ministry of Corporate Affairs has initiated action under section 248 of the Companies Act, 2013 for removing the names of the companies which are  prima  facie  not  carrying  on  any  business  or  operation  for  a  period  of  two  immediately preceding financial years and meet certain other criteria as prescribed in the provisions of section 248  (1)  (c)  of  the  Companies  Act,  2013  and  the  Rules  framed  thereunder.  Enforcement Directorate  has  taken  up  investigations  in  certain  cases  against  'Shell  companies'  under  the provisions  of  Prevention  of  Money  Laundering  Act  (PMLA),  2002.  The  details  of  such  cases cannot be provided at this stage, since the disclosure of the same may not be in public interest as the same may hamper the on-going investigations.

(b) & (c) The key function of the Income Tax Department (ITD) includes detection and prevention of tax evasion. The ITD maintains databases based upon information gathered through various sources including tax filings, information collected as per provisions of Income-tax Act, 1961 and Income-tax Rules, 1962 and information emanating out of investigations, assessments, etc. Action against entry operators  and  associated  shell  companies  is  an  on-going  process.  Cases  for  e-verification  of  cash deposits  made  during  the  demonetization  period  i.e.  9 th November  to  30 th December,  2016  under 'operation clean money' have been identifie d by matching the database on tax profiles of persons with the  quantum  of  deposits  made  by    them.  As  part  of  the  initial  phase,  the  ITD  has  sought  online response as per pre-defined parameters on source(s) of case deposited by 17.92 lakh persons through its e-filing portal. Further disclosure of information in respect of specific persons is prohibited except as provided under section 138 of the Act.

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