Compromise Formula Proposed To Tackle White Collar Crimes

A consensus seems to be emerging among various government departments on the issue of exclusion of financial crimes from the ambit of the proposed Money Laundering Bill. A meeting of the committee set up to draft this bill, to be held next week, is expected to thrash out the existing differences.

The investigative agencies, which had earlier opposed the exclusion of financial crimes from the ambit of the proposed bill, have suggested a compromise formula.

The agencies, which have representatives in the committee, have suggested that complementary legislation like the Indian Penal Code (IPC) be amended to address white collar crimes if the proposed money laundering bill does not include provisions to tackle these offences.

 

The Indian Penal Code, which had been incorporated in the last century, is not equipped to handle sophisticated white collar crimes which occur nowadays. In order to handle these crimes, we need to strengthen this Act or institute an alternate Act, pointed out a senior revenue official.

The investigative agencies had earlier refused to endorse the initial draft bill which had been submitted to the finance ministry since it excluded financial crimes from its ambit.

The first draft of the bill, which was handed over to the finance ministry a few days ago, had excluded financial crimes like tax evasion, over invoicing of exports and under invoicing of imports from the definition of criminal activities liable to be punished under the law.

This had led to a serious debate between various members of the committee who would prefer a much stricter money laundering bill than the current draft.

The dissenting members had maintained that with the replacement of the Foreign Exchange Regulation Act (Fera) with the Foreign Exchange Management Act (Fema) which focuses mainly on current account convertibility and goes soft on financial crimes, we need a stronger money laundering bill to address financial crimes.

The initial ceiling approved by the committee for initiating investigations into possible money laundering is Rs 1 crore and any bank deposit equal to or more than this amount will be investigated. The caveat being that the source of this money should be traced to criminal activities in order to become punishable under the law.

According to a report prepared by the revenue intelligence and placed before the committee, maximum money laundering in the country is not done through drug trafficking or criminal activities but through under-invoicing and over-invoicing in foreign exchanges, misuse of value-based advanced licence and quantity-based advance licence and hawala operations.