Lok Sabha Question No. 64 (UNSTARRED), answered on 2019-11-18
Subject: Black Money
Ministry: FINANCE
Asked by: Dr. T. Sumathy (a) Thamizhachi Thangapandian

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

## LOK SABHA UNSTARRED QUESTION NO. 64

## TO BE ANSWERED ON MONDAY THE 18 TH  NOVEMBER, 2019 KARTIKA 27, 1941 (SAKA)

## BLACK MONEY

## 64: DR. T. SUMATHY (a) THAMIZHACHI THANGAPANDIAN:

Will the Minister of FINANCE be pleased to state:

- (a)  whether  money  coming  into  India  from  foreign  countries  for  various  purposes  as participatory note are monitored/ scanned/probed;

(b) if so, the details thereof alongwith and the agency-wise findings thereof during the last five years and the action taken by the Government in this regard so far;

(c) whether India has entered into a pact with other countries to share the mutual flow of information pertaining to money laundering and funding etc and if so, the details thereof;

(d) the action plan being taken by the concerned countries in this regard; and

- (e) the effective steps taken by the Government to bring back the black money stashed in foreign countries as promised?

## ANSWER

## MINISTER OF STATE FOR FINANCE

## (SHRI ANURAG SINGH THAKUR)

(a) & (b): Yes, Sir. The investments in India from foreign countries as Participatory Notes(PNotes)/Offshore Derivative Instruments (ODI) are being monitored through monthly reports submitted by ODI issuing Foreign Portfolio Investors (FPIs), as required under SEBI (Foreign Portfolio Investors) Regulations, 2019.

SEBI has also mandated stringent KYC norms and has been tightening the disclosure and reporting norms from time to time in order to check misuse of these instruments and strengthen the P-Notes/ODI Regulatory Framework.

Due  to  steps  taken  by  SEBI,  the  investment  through  P-Notes/ODI  route  has  reduced significantly over the past years which is clear from the fact that the notional value of ODIs (on Debt, Equity & Derivatives) as a percentage of Asset Under Custody of the FPIs has come down from 55.7% in June, 2007 to 2.3% in September, 2019.

Further, in terms of the amended Rule 3 of the Prevention of Money Laundering Rules, every reporting entity is required to maintain the record of all transactions, including the record of all cross border wire transfers of more than Rs 5 lakhs or its equivalent in foreign currency, where either  the  origin  or  destination  of  the  funds  is  in  India.  Such  information  is  required  to  be furnished to Financial Intelligence Unit (FIU-IND) by 15 th of successive month. These cross border wire transfer reports are linked with the Suspicious Transaction Reports (STRs) and disseminated to various Law Enforcement Agencies (LEAs) as part of STRs.

(c) & (d): Yes Sir. India has bilateral cooperation with other countries to share the mutual flow of information pertaining to money laundering. For the purpose of intelligence sharing, the requests are made with respective Financial Intelligence Units through FIU-IND.

In criminal matters, the requests under Mutual Legal Assistance Treaty (MLAT) are sent to the foreign jurisdictions.  Currently, India has MLAT with 39 countries. Where the MLAT does not exist, the requests are sent on the basis of mutual assurance of reciprocity.

Further, India has been proactively engaging with foreign governments with a view to facilitate and  enhance  the  exchange  of  information  under  Double  Taxation  Avoidance  Agreements (DTAAs)/Tax Information Exchange Agreements (TIEAs)/Multilateral Conventions.

(e):  Major steps taken by the Government to bring back black money stashed abroad, interalia, include the following:

- (i) Enactment  of  the  Black  Money  (Undisclosed  Foreign  Income  and  Assets)  and Imposition of Tax Act, 2015 w.e.f. 01/07/2015
- (ii) Constitution of the Special Investigation Team (SIT) on Black Money in May, 2014 under the Chairmanship and Vice-Chairmanship of two former Judges of Hon'ble Supreme Court. Investigation into cases involving substantial black money/undisclosed  income,  particularly  black  money  stashed  abroad,  are  being extensively and intensively monitored by the SIT.
- (iii) India  has  put  in  place  the  necessary  domestic  legislation  and  entered  into international agreements for sharing of financial account information on automatic basis.  India  has  received  financial  account  information  from  USA  under  Inter Governmental  Agreement  based  on  Foreign  Account  Tax  Compliance  Act (FATCA) during the years 2015 to 2019.
- (iv) Information in cases under investigation for tax evasion is also received on request basis under the relevant provisions of tax treaties entered into by India with foreign jurisdictions. Information received on automatic as well as request basis is used to tax unaccounted income and assets of Indian residents abroad.
- (v) India has started Automatic Exchange of Information since 2017. In 2017, 2018 and 2019,  India  has  received  financial  account  information  of  Indian  residents  from many other partner jurisdictions based on AEOI under CRS and is today receiving Financial  Account  Information  from  over  90  jurisdictions  as  per  the  Common Reporting Standard. India has been one of the leaders of this initiative and as a result huge amount of information is now being received from foreign jurisdictions.
- (vi) The  Prevention  of  Money-laundering  Act,  2002  has  been  amended  to  enable attachment and confiscation of property equivalent in value held within the country or  abroad  in  a  case  where  the  proceeds  of  crime  are  taken  or  held  outside  the country.
- (vii) The  Fugitive  Economic  Offenders  Act,  2018  has  been  enacted  to  provide  for attachment  and  confiscation  of  proceeds  of  crime  associated  with  scheduled economic  offences  and  the  properties  of  the  fugitive  economic  offenders  and thereby deter them from evading the process of Indian law by remaining outside the jurisdiction of Indian courts.

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