Money laundering: I-T raids continue on Chinese individuals, local contacts

I-T dept has seized a number of documents and computer peripherals and has recovered about Rs 60-70 lakh cash from multiple premises in the Delhi-NCR region till now

The Income Tax Department on Wednesday continued its raids against some Chinese individuals and their local associates in connection with its probe into a Rs 1,000 crore worth cross-border money laundering racket using shell or dubious firms, officials said.

The department, official sources said, has seized a number of documents and computer peripherals and has recovered about Rs 60-70 lakh cash from multiple premises in the Delhi-NCR region till now.

The tax sleuths raided at least two dozen premises in Delhi, Gurgaon and Ghaziabad on Tuesday as part of the action under which it covered the Chinese, some of their Indian associates and bank officials, the Central Board of Direct Taxes (CBDT) had said in a statement.

The department is questioning several people and is in the process to freeze a number of bank accounts linked to the accused and some dubious companies floated and operated by them, the sources said.

The department has detained a 42-year-old Chinese man, identified as Charlie Peng, alleged to be the kingpin of the racket and few other nationals of that country on work visa in India are on its radar.

Charlie is allegedly holding a fake Indian passport and officials said he created a "web of sham companies to launder hawala funds to and from China" in the past two-three years.

They said his front or showcase business was import and export of medical and electronic goods and some other items.

Charlie, the sources said, was arrested by the Special Cell of the Delhi Police in September, 2018 on charges of fraud and forgery and was allegedly running an illegal money changer.

It is alleged that Peng got a fake Indian passport from Manipur after marrying a woman from that state.

The tax officials have shared the information of alleged possession of fake Indian passport with police authorities who are expected to book the Chinese man for violation of the Passport Act.

Meanwhile, when asked for a reaction on the raids, a Chinese Foreign Ministry spokesman in Beijing said he was not aware of the details.

"But I can tell you that the Chinese government requires Chinese companies to observe international rules, local laws and regulations, while doing business overseas," he said.

"We are committed to safeguard the legitimate rights and interests of Chinese companies and nationals," the spokesperson said.

The CBDT in its statement, without taking any names, had said that the "subsidiary of Chinese company and its related concerns have taken over Rs 100 crore bogus advances from shell entities for opening businesses of retail showrooms in India".

It said the searches were launched based on "credible inputs that a few Chinese individuals and their Indian associates were involved in money laundering and hawala transactions through a series of shell entities."

"Search action revealed that at the behest of Chinese individuals, more than 40 bank accounts were created in various dummy entities, entering into credits of more than Rs 1,000 crore over the period," the CBDT had said.

"Incriminating documents of hawala transactions and money laundering with active involvement of bank employees and Chartered Accountants have been found as a result of the search action," it said.

Evidences of foreign hawala transactions involving Hong Kong and US dollars have also been unearthed, the CBDT said.

India recently banned 59 Chinese apps (Internet based mobile applications) in the aftermath of a continuing standoff between the militaries of the two countries in Ladakh.

New Delhi has also amended the General Financial Rules, 2017, imposing restrictions on public procurement from bidders of countries that share a land border with India, a move that will directly affect Chinese entities.