Keep Good Track of Globetrotting Money

CONTEXT: Suspicious bank transactions worth over $2 trillion over 2011-17 have been reported by the banks themselves to the US Treasury’s Financial Crimes Enforcement Network (FinCEN), covers some prominent Indian entities as well.

Significance of Suspicious Activity Reports (SAR):

• It is a compliance requirement for banks under the US anti-money laundering statutes and regulations.
• It has to be followed up with thorough investigation by agencies to find out if money laundering, fraud or terror financing is involved.

Misconceptions and counter facts:

• Everyone who figures in the list is a criminal.

• Fact: Companies minimize their tax liability by arranging their tax affairs in a legal way.

• Every border crossing of globetrotting Indian money is nefarious.

• Fact: Companies, for legal reasons, create and operate offshore entities.

Reforms: 

• Make it mandatory for companies to declare their beneficial owner, to identify shell companies that anonymize illegal transactions. For, E.g.  as done by Britain.
• Making information available in the public domain will be useful to regulators, law enforcement agencies and businesses.
• Utilize Unique Legal Entity Identifier: Global cooperation is needed for this G20 initiative, for greater transparency.

• Beneficial ownership tracing along a chain of holding and cross-holding companies becomes easier.