The Directorate of Revenue Intelligence (DRI) in Mumbai has unearthed a ‘banking-hawala’ scam, in which reputed public sector banks illegally remitted Rs. 2,240 crore overseas based on forged documentation and declarations of traded goods by exporters and importers.
Inflated export bills
The funds, generated in connivance with officials of six public sector banks, were a result of duty drawbacks claimed on the basis of inflated export bills and, in most cases, non-existent imports. The actual import value of the goods was not more than Rs. 60 crore, said DRI officials, who did not wish to be identified.
The fictitious trade circuit was mostly controlled from the one-room office of Stelkon Infratel at Masjid Bunder in south Mumbai, while a chunk of the remittances was made by Punjab National Bank’s branch on Daryasthan Street at Mandvi, Masjid.
This branch alone, the DRI investigation revealed, remitted Rs. 1,398 crore without ‘any due diligence’ for verifying the identity of the clients or carrying out the necessary suspicious cash transaction reporting (STR/CTR) to the financial intelligence unit-India (FIU-IND).
‘Laundered money’
“There is also a violation of the Foreign Exchange Management Act, which controls the amount of money that can be remitted abroad,” a DRI official said. “This money has no legal history, so obviously it is laundered money.”
The office of Stelkon in Room 206, Building 56, Abdul Rehman Street, Mumbai, is currently deserted and occupied by artisans employed by a goldsmith.
“Stelkon staff moved out of the premises a month ago,” a staff member of the building contract firm told The Hindu. “The office was managed by a woman named Hanifa Sheikh. We don’t know where the firm operates from now.”
Another branch of Canara Bank in south Mumbai remitted Rs. 340 crore, while most of the alleged forged bills were provided by Disney International, operating out of Nagpada (also in south Mumbai), according to the investigation.
Officials said that, prima facie, the names of the unscrupulous companies in whose name goods were invoiced sound bogus, and they were indulging in trade-based money laundering allegedly on behalf of unknown jewellers and diamond merchants of south Mumbai. “We suspect that a circuit of jewellers and diamond merchants have connived with bank officials to carry out this forgery, with officials allowing submission of forged bills of entry into IceGate, the e-payment gateway,” said sources in the DRI.
A.K. Das, general manager, Canara Bank, Mumbai, said the bank was not aware of any foreign exchange or foreign remittances fraud being investigated by the DRI.
“We have no reported cases in Mumbai of this nature. The bank is doing its due diligence in checking mechanisms for such incidents,” he told The Hindu.
Suveer Khanna, a partner at KPMG said: “While public sector banks are speeding up to improve their monitoring mechanisms, the private banks have an early advantage in that they are invested into improving risk management systems. While banking regulations are in place to prevent such frauds, the onus is also on the banks to take responsibility for building stronger monitoring mechanisms.”
The DRI is said to have finished its probe and is in the process of submitting a report to the Central Bureau of Investigation and Enforcement Directorate.
