The Enforcement Directorate has launched money laundering investigations into a complex network of domestic and international shell companies, foreign exchange and travel agencies that were allegedly used by Naresh Jain and his associates for illegal fund transfers across more than 18 countries. In just a few months, the syndicate had allegedly transferred $15.5 crore using close to 190 accounts with several foreign banks.
The group is suspected to have caused losses worth thousands of crores to the exchequer by helping unscrupulous Indian businessmen evade import duties, according to the agency.
Global operations
Mr. Jain was allegedly involved in large-scale money laundering and unlawful money transfer to countries such as the U.S., the UAE, Canada, Australia, Brazil, Burkina Faso, Indonesia, Korea, Malaysia, Singapore, Turkey, Taiwan, Vietnam, China, Hong Kong, Afghanistan and Bangladesh.
The ED gathered initial information about the international “hawala” network during searches in July 2017, which led to seizure of documents. Suspicious transactions worth more than ₹10,000 crore were detected.
At that time, the accused persons were operating nearly 190 accounts with several foreign banks, opened in the name of 95 firms. Of these companies, 53 were based in Hong Kong, 37 in Dubai and five were in Singapore.
The ED probe revealed that the bank accounts used for illegal transactions, through digital devices and telephonic transfers, would remain operational for just four to six months, after which they would be closed and new ones opened. The accused persons changed their mobile numbers frequently and also used international SIM cards to evade detection, the agency alleged.
“The scrutiny of aforesaid telephonic transfers prima facie revealed that mainly all these were done from the bank accounts of his (Mr. Jain’s) foreign shell/bogus firms or companies mainly based in Hong Kong, Dubai and Singapore,” alleges the FIR recently lodged by the Economic Offences Wing of the Delhi Police, on the basis of a complaint from the ED. The police case has enabled the agency to initiate the probe under the Prevention of Money Laundering Act.
Investigations revealed that the transfers were made for payments to various exporters on behalf of a large number of Indian importers. As alleged, the main beneficiaries of such fund transfers were China-based exporters. For the import of goods or material, the unscrupulous importers procured bogus and undervalued “Bill of Entries” from various foreign exporters at very low rates. To evade import duties, they paid the substantial sum against the imports through the bank accounts of firms allegedly controlled by Mr. Jain.
More than a dozen suspected members of the syndicate have been identified so far. About 40 tour and travel agencies, which fraudulently transferred funds — via authorised dealers — into the bank accounts of shell firms under false declarations, have also come under the scanner. The funds were subsequently diverted to various exporters overseas. The ED later found out that particulars of many of these agencies, as shown in the records, were false.
The Directorate alleges that the companies controlled by Mr. Jain were not into any genuine business and that several instances of huge deposits in their accounts during the demonetisation drive have also come to light.
Mr. Jain, allegedly an old hand in the world of international hawala operations, was arrested by the Dubai Police along with nine accomplices on February 20, 2007. He was accused of laundering drug money in the United States, Europe, Middle-East and African countries. The Serious Organized Crime Agency of Britain had also prepared a dossier, presented in November 2009, on his money laundering activities since 2005. It is alleged that Mr. Jain’s son Paras is currently in Dubai jail.