Money Laundering: Necessary Action Initiated Against Shell Companies Under PMLA, FEMA, Says Govt

Pankaj Chaudhary, minister of state for finance, said that the CBI has informed the government that charge sheets have been filed in DHFL, ABG Shipyard, and BPSL cases

Pankaj Chaudhary said the total number of money laundering cases filed under the provisions of the PMLA, 2002, by ED during the past five financial years (2018-19 to 2022-23) are 195, 562, 981, 1180, 579, and 3497, respectively.

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Pankaj Chaudhary, minister of state in the Ministry of Finance, on Monday informed the Lok Sabha that detailed investigations on money laundering cases by the Enforcement Directorate (ED), under the provisions of PMLA and FEMA, revealed the role of several Indian shell companies, foreign firms, and offshore shell companies. As per provisions of PMLA and FEMA, necessary action has been taken in these cases, said the minister.

However, he didn’t divulge any more information on the floor of the house stating that it may not be in larger public interest as the same could hamper the ongoing investigations.

Chaudhary was answering Deepak Baij’s questions regarding money laundering. Baij asked the details of cases on money laundering registered by the ED during each of the last five financial years till March 25, 2023. He also sought details of cases of money laundering filed by the ED against shell firms registered in India during the same period March 25, 2023, in states or Union territories.

In his reply, Chaudhary said the total number of money laundering cases filed under the provisions of the PMLA, 2002 by ED during the past five financial years (2018-19 to 2022-23) are 195, 562, 981, 1180, 579, and 3497, respectively.

"The role of Directorate comes in to picture as and when any contravention under FEMA and occurrence of scheduled offence disclosing the generation of Proceeds of Crime (PoC) as defined under Section 2(1)(u) of PMLA is noticed by the Directorate or a warrant of arrest issued by the Magistrate or Court after taking cognizance of any scheduled offence appended to FEOA and where the amount involved is Rs 100 crore or above, provided the accused has gone outside India,” he added.

In another question-answer session in the Lok Sabha member, Dinesh Chandra Yadav, raised questions on bank frauds.

Yadav asked the government about the present status of the four biggest cases of bank fraud namely DHFL (Rs 34,615 crores), ABG Shipyard (Rs 22,842 crores), H-Tech Auto (Rs 25,000) crores), and Bhushan Power and Steel (Rs 47,204 crores). He sought to know whether the government proposes to recover the money defrauded in the said big bank scams, and, if so, the details of the cases.

During reply, the minister of state for finance informed that various mechanisms are available with the government for recovery, which include, inter alia, filing of a suit in civil courts or in Debts Recovery Tribunals, action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, filing of cases for initiation of corporate insolvency resolution process (CIRP) in the National Company Law Tribunal under the Insolvency and Bankruptcy Code, 2016.

"As per the inputs received from the Insolvency and Bankruptcy Board of India, CIRP was initiated in the cases of DHFL, ABG Shipyard and Bhushan Power and Steel (BPSL), and resolution plans were approved in cases of DHFL and BPSL, with amount realisable to creditors of Rs 37,167 crore and Rs 19,895 crore, respectively. Further, liquidation order was passed in case of ABG Shipyard, and more than Rs.1,000 crore has been realised by the liquidator from sale of assets,” Chaudhary said, while adding that the Reserve Bank of India has informed that no fraud pertaining to H-Tech Auto has been reported by any bank.

The minister said that the CBI has informed the government that charge sheets have been filed in cases of DHFL, ABG Shipyard, and BPSL. Besides that, the ED has apprised that proceeds of crime amounting to Rs 10,232.43 crore have been attached and six persons have been arrested in these cases, under the PMLA.

Meanwhile, the Rajya Sabha on Monday returned the Finance Bill-2023 with an amendment to Lok Sabha before being adjourned for the day amid Opposition uproar over the Adani issue.