Lok Sabha Question No. 2298 (UNSTARRED), answered on 2016-07-29
Subject: Money Laundering and Tax Heavens
Ministry: FINANCE
Asked by: LAXMI NARAYAN YADAV, SONA RAM CHOUDHARY, RAM TAHAL CHOUDHARY

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

## LOK SABHA UNSTARRED QUESTION NO. 2298

## TO BE ANSWERED ON FRIDAY, JULY 29, 2016

SHRAVANA 07, 1938 (SAKA)

## Money Laundering and Tax Heavens

2298. Shri Laxmi Narayan Yadav, Col. Sonaram Choudhary and Shri Ram Tahal Choudhary :

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government has data relating to investment made in Indian entities/individuals  through  shell  companies  registered  in  tax  heavens  like  Mauritius, Seychelles, Cayland Islands, Leicesterberg and new such centres, if so, the magnitude of such investments;
- (b) whether  any  action  has  been  initiated/steps  proposed  to  be  taken  to  prevent  money laundering by such activities, if so, the detailed action plan in this regard; and
- (c) whether the Government has any mechanism to quarantine on coming of black money in the  Foreign  Direct  Investment  and  other  foreign  investments,  and  if  so,  the  details  of achievement made therefrom during the last two years and the current year?

## ANSWER

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

- (a) Enforcement  Directorate  has  registered  cases  under  Prevention  of  Money  Laundering Act, 2002 (PMLA) against 01 company for Rs. 18.27 crores and under Foreign Exchange Management  Act,  1999  (FEMA)  against  15  companies  amounting  to  Rs.  17789.92 crores,  who  have  received  FDI  from  Tax  Heavens  like  Mauritius,  France,  Cyprus, Singapore, Virgin Islands, Luxemburg, Dubai and Tunisia.
- (b) to (c)  In recent times, the Government has taken several effective measures, both by way of  policy-level  initiatives  as  well  as  through  more  effective  enforcement  action  on  the ground,  to tackle tax evasion, particularly  with reference  to undisclosed  foreign assets/income. These steps include putting in place robust legislative and administrative frameworks, systems and processes with due focus on capacity building and integration of information and its mining through increasing use of information technology. Major initiatives taken by the Government in the recent past include -
- (i) Constitution  of  the  Special  Investigation  Team  (SIT)  on  Black  Money  under Chairmanship and Vice-Chairmanship of two former Judges of Hon'ble Supreme Court,
- (ii) Enactment of a comprehensive law - 'The Black Money (Undisclosed  Foreign Income and Assets) and Imposition of Tax Act, 2015' which has come into force w.e.f. 01.07.2015 to specifically and more effectively deal with the issue of black money stashed away abroad,
- (iii) Constitution  of    Multi-Agency  Group  (MAG)  consisting  of  officers  of  Central Board  of  Direct  Taxes  (CBDT),  Reserve  Bank  of  India  (RBI),  Enforcement Directorate (ED) and Financial Intelligence Unit (FIU) for investigation of recent revelations in Panama paper leaks,
- (iv) 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,
- (v) According high priority to the cases involving black money stashed away abroad for investigation and other follow-up actions including prosecutions in appropriate cases,
- (vi) While  focusing  upon  non-intrusive  measures,  due  emphasis  on  enforcement measures  in  high  impact  cases  with  a  view  to  prosecute  the  offenders  at  the earliest for credible deterrence against tax evasion/black money,
- (vii) Proactively  furthering  global efforts  to  combat  tax  evasion/black  money, inter alia ,  by  joining  the  Multilateral  Competent  Authority  Agreement  in  respect  of Automatic  Exchange  of  Information  (AEOI)  and  having  information  sharing arrangement with USA  under  its Foreign Account Tax Compliance Act (FATCA),
- (viii) Renegotiation of DTAAs with other countries to bring the Article on Exchange of Information to International Standards and expanding India's treaty network by  signing  new  DTAAs  and  TIEAs  with  many  jurisdictions  to  facilitate  the exchange of information and to bring transparency,
- (ix) Enabling attachment and confiscation of property equivalent in value held within the  country    where  the  property/proceeds  of  crime  is  taken  or  held  outside  the country by amending the Prevention of Money-laundering Act, 2002 through the Finance Act, 2015,
- (x) Introduction of the Benami Transactions (Prohibition) Amendment Bill, 2015 to amend the Benami Transactions (Prohibition) Act, 1988 with a view to, inter alia, enable confiscation of Benami property and provide for prosecution,
- (xi) Initiation  of  the  information  technology  based  'Project  Insight'  by  the  Income Tax Department for strengthening the non-intrusive information driven approach for improving tax compliance and effective utilization of available information.
- (xii)The Foreign Exchange Management Act, 1999 (FEMA) has also been amended vide Finance Act, 2015 to the effect that if any foreign exchange, foreign security of any immovable property situated outside India is held in contravention of the provisions  of  this  Act,  then  action  may  be  taken  for  seizure  and  eventual confiscation of assets of equivalent value situated in India. These contraventions are also being made liable for levy of penalty and prosecution with punishment of imprisonment up to five years.

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