Lok Sabha Question No. 2214 (UNSTARRED), answered on 2015-12-11
Subject: Hawala
Ministry: FINANCE
Asked by: KURUPPASSERY VARKEY THOMAS, B.N. CHANDRAPPA

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF REVENUE

## LOK SABHA UNSTARRED QUESTION NO. 2214

TO BE ANSWERED ON FRIDAY, DECEMBER 11,2015

AGRAHAYANA 20, 1937 (SAKA)

## Hawala

## 2214. PROF. KV.THOMAS: SHRI B.N. CHANDRAPPA:

Will the Minister of FINANCE be pleased to state:

- (a) whether incidence of hawala and money laundering are on the rise in the country;
- if the details thereof and the number of such cases reported during the last three years and the current year; incident/bank-wise; SO,
- c) whether the Government has taken any action against such individuals and banks involved therein, if so, the details thereof; and
- (d) the steps taken by the Government to strengthen the financial intelligence in the country in this regard?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI JAYANT SINHA)

- (a) to (c) The number of cases registered by the Directorate of Enforcement under Foreign Exchange Management Act; 1999(FEMA) and Prevention of Money Laundering Act; 2002(PMLA) during the last three Financial Years and Current Year as follows

| Financial Year   |   Cases Registered under FEMA |   Cases Registered_under PMLA |
|------------------|-------------------------------|-------------------------------|
|                  |                          1722 |                           221 |
| 2013-14          |                          1041 |                           209 |
| 2014-15          |                           915 |                           178 |
|                  |                           572 |                            65 |

Show Cause Notices have been issued under FEMA in 728 Hawala cases during last three years and current CBI has also registered 06 cases in the related matters during the last 3 years and current In 04 cases, charge-sheets have been filed in the court and 02 cases are under investigation. The details of these cases are given in the Annexure. year. year.

- (d) The Reserve Bank of India(RBI) vide circular letter dated October 28, 2015 has issued instructions to all scheduled commercial banks highlighting the irregularities observed. All banks were advised in the letter to look into these aspects and conduct thorough Internal Audit and place the report before Audit Committee of the Board of respective banks and to forward the findings to RBI so that further corrective action aS required may be taken in this regard. Government of India in 2005 has also set up Financial Intelligence   Unit  (FIU-IND) FIU-IND is  responsible for receiving and disseminating   suspicious transaction reports relating to money laundering and financing of terrorism from its reporting entities comprising financial institutions and Designated Non Financial Business and Professions e.g-, Casinos and Registrars of Property.

## Annexure

| SL No   | Case Date of Registration and Sections of Law                                                                                                                                                                                                         | Allegations in brief                                                                                                                                                                                                                                                                                                                                                                            | Names of the Banks involved                                               | Amount of Estimated Loss    | Present Status/Action taken                                                                                                                                                                                                                                                                                                                                                                          |
|---------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------------|-----------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         | RC.8/E/2012 dated 15.05.2012 U/Sec.120-B IPC r/w 420 & 511 IPC, Sec. 25(1)(2) of the Fertilizer (Control) Order 1985, 7(1)(a)(ii) of the Essential Commodities Act; 1955 and Sec: 13(2) r/w 13(1)(d) of PC Act 1988 and substantive offences thereof: | Both accused persons made illegal financial transaction through Bank account without any trade:                                                                                                                                                                                                                                                                                                 | Axis Bank, Pursaivalkam Branch, Chennai. 2 Axis Bank, Vashi, Navi Mumbai. | Rs.60,50,000/_              | Chargesheet filed in the ACMM Matter referred to Enforcement Directorate, Chennai for action against 2 persons for their indulging in Money Laundering Hawala taking                                                                                                                                                                                                                                 |
| 2       | RC 24/2012-ACB Chennai 13.06.2012 U/s.120-Br/w 420 IPC and Sec.13(2) 1/w 13(1)(d) of PC Act; 1988                                                                                                                                                     | the period 2007 2009 , accused persons entered into criminal conspiracy to cheat MMTC Ltd. in the matter of bullion In pursuance of the said conspiracy the accused persons extended undue favour to the firm to the tune of Rs.18 crores by intentionally omitting to debit and recover the difference exchange rate from the firm, thereby wrongful loss to MMTC Ltd. During trading: causing | Bank of India                                                             | 18 crores to MMTC Ltd. loss | Chargesheet has been  filed in the case: Self Contained Note was sent to Enforcement Directorate to examine the facie FEMA violations by Bank of India in the bullion trade transactions of accused MMTC Ltd. as a conduit and to take appropriate action: 2_ A separate note has been sent to Bank of India to take appropriate action against the bank officials for various omissions prima using |

|    |                                                                                                                                                                                                                               |                                                                                                                                                                                                                                                                                                                       |                                                          |                                                                             | and  commissions in the                                                                                                                                                                                                                          |
|----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|----------------------------------------------------------|-----------------------------------------------------------------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    | RC 25/E/2013 dt: 30.10.2013 U/Sec.120-B r/w 420, Sec.13(2) r/w 13(1)(d) of PC Act; Sec.21 r/w 4(1), 4(1), 4(1)(A) and 23 of Mines and Minerals (Development and Reguiation) Act, 1957 , Sec.24 of Karnataka Forest 1963. Act, | Accused procured 105240 MT of Iron Ore from various  suppliers and illegally transported 56496 MTs of iron ore without permit:                                                                                                                                                                                        | IDBI Bank, Bangalore.                                    |                                                                             | transactions. Charge sheet has been   filed in the case Self Contained Note sent to Enforcement Directorate, Bangalore for considering action under PMLA against accused persons for their bank accounts to be used for money laundering letting |
|    | RC BSM 2014 E 0002 dated 08.03.2014 u/s 120-B r/w 201,409, 420,471/468 IPC & 13(2) r/w 13(1)(d) of PC Act 1988 and substantive offences thereof                                                                               | Rs_ 180.00 crores entrusted by JNPT to accused Manager, Oriental Bank of Commerce, Malwani Malad Branch for creation of FDRs which was criminally misappropriated and transferred to private account                                                                                                                  | ICICI Bank 2 ING Vysya Bank 3.ChinaTrust Commercial Bank | Rs. 180.00 Crores                                                           | purpose Two Charge- sheets  have been filed in the case on 26.06.2014 & 03.01.2015. ED. Mumbai Surat are into the transactions from PMLAangle looking                                                                                            |
| 5  | RCBDL/2015/E/ 0009- BS&FC/ DLI, U/s Ir/w 420 IPC and Sec:(by 13(2) 13(1)(d) PC Act; 1988.                                                                                                                                     | The accused Ashok 120-Bl Vihar Branch, New Delhi abusing their official oflposition entered into criminal conspiracy with 59 current account holders and in furtherance of the said conspiracy , the   accused bank officials allowed overseas remittance of Foreign Exchange of approximately crores (revised figure | officials of Bank of Baroda                              | 13.75 Crores (As may be increased as the investigation is at initial stage) | Under Investigation                                                                                                                                                                                                                              |

|                                                                                          | 4681.56 crores) in illegal and highly irregular manner by   violation the established norms of the Bank                                                                                                                                                                                                                |                   |                  |                      |
|------------------------------------------------------------------------------------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|-------------------|------------------|----------------------|
| RC 12/2015-ACB Chennai 30.03.15 U/s 120-B r/w 420 IPC 13(2) r/w 13(1)(d) of PC Act, 1988 | Accused person in criminal conspiracy with bank officials in the matter of sanction of Temporary Over Draft limit of Rs.10 crores against the security lien of another account: Accused persons continued to allow over drafts over and above the approved limit without any authorisation of the competent authority: | UCO Bank, Chennai | 13,02,08,069 / - | Under Investigation. |

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