Keep Good Track of Globetrotting Money

The Economic Times     23rd September 2020     Save    
QEP Pocket Notes

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.
QEP Pocket Notes