India's big crackdown! 20 export houses under scanner for illicit Pakistan trade using UAE route; trade-based money laundering suspected
The investigating authority is specifically examining transactions over the previous 14 months. (AI image)
India cracks down on suspected goods trade with Pakistan! The Financial Intelligence Unit (FIU) of India is investigating approximately 20 export houses suspected of engaging in illicit money transfers with Pakistan through the UAE corridor.
These export houses are being suspected for goods trade as a way to launder money to and from Pakistan via the UAE.
The investigation centres on dubious financial activities, particularly cash in advance (CIA) payments and overseas agent commissions, which were potentially used to disguise money laundering. CIA transactions require purchasers to remit payment before goods dispatch.
The transactions under investigation involve low-quality jewellery, semi-precious stones, cosmetics, fragrances, dry fruits and electrical equipment, amongst other items.
Lens on laundering
"We are looking at the trade-based money laundering between India and Pakistan where they used dummy business basically to send money out of India. About 20 export houses are under scanner," a senior official informed ET.
The official confirmed that relevant authorities have been notified to investigate potential terrorism connections.
The investigating authority is specifically examining transactions over the previous 14 months, where there are suspicions of significantly inflated product prices and commissions, with multiple accounts utilised to conceal the origin of funds.
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"Some transactions were exceptionally high for the product category and in one case the payment to the agent, based in UAE, was higher than the total cost of the consignment," the official added.
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To illustrate this, the official provided details about an ordinary electrical conductor component, typically valued at ₹100 per unit in the market, being imported at an extraordinarily high price range of ₹8,000-19,000 per unit.
Additionally, basic costume jewellery, with a standard market value between ₹100-150, was sent to UAE and subsequently to Pakistan at an inflated price of ₹30,000 per piece.
Cross-border cash transactions face increasing challenges due to stringent customs procedures and digital economy advancements, compelling criminals to devise new money laundering methods, the report said. Authorities worldwide maintain vigilance against trade-based money laundering activities, according to officials.
The Directorate of Revenue Intelligence (DRI) collaborated with Hong Kong authorities last year to uncover a scheme involving synthetic diamonds. These low-cost diamonds were imported into India at values inflated by more than 100 times, facilitating illegal foreign currency transfers from India.
Further investigations revealed that the importing entity was also engaged in exporting diamond-studded jewellery to Hong Kong and several other countries at substantially inflated values.
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