Offshore black money: ED for seizing domestic equivalent

  • Gaurav Choudhury, Hindustan Times, New Delhi
  • Updated: Nov 26, 2014 01:15 IST

Indians suspected of holding illegal assets abroad could have property or other possessions of equivalent value seized at home. This is one among many measures that a government agency has proposed to stamp out black money.

The Enforcement Directorate (ED), which tracks overseas transactions and money laundering deals, has proposed amendments in the Foreign Exchange Management Act (FEMA), that will enable the “competent authority” to “seize value equivalent” of “foreign exchange, foreign security or immovable property” situated in India of individuals and companies, if they are found to have been holding such assets abroad illegally, a top source told HT.

ED is entrusted with enforcement of two laws—FEMA and the Prevention of Money Laundering Act (PMLA)—which empower the agency to crack down on unaccounted money and confiscate assets.

“Creating an appropriate legislative framework is important to deal with the problem of black money,” the source said.

“With a view to bringing back illegal black money stashed abroad, a proposal has been sent to the department of revenue by ED proposing amendments in FEMA through Section 2 (gg), 13 A and 37 A,” the source said.

Last month the government submitted to the Supreme Court a list of 627 Indians holding accounts in HSBC Bank, Geneva. The court directed its special investigating team (SIT) to examine the list and take appropriate action.

The government is expected to reveal a new estimate — the first since 1985 — of India’s unaccounted “black money”, most of it stashed abroad, and follow it up with an action plan to bring this account to book.

It has commissioned three Delhi-based think-tanks—the National Council for Applied Economic Research (NCAER), National Institute of Public Finance and Policy (NIPFP), and National Institute of Financial Management (NIFM) to bring out an estimate of India’s black economy.

The BJP had, in a 2011 report, estimated India’s black economy to be between $500 billion and $1.4 trillion (Rs 30-84 lakh crore).

Switzerland has agreed to share information related to HSBC and Liechtenstein lists of account holders, provided independent evidence is collected by Indian authorities.

According to the Swiss National Bank (SNB), Switzerland’s central banking authority, Indians’ money in Swiss banks in 2013 jumped by 40% to nearly two billion Swiss Francs CHF (Rs 14,000 crore) from 1.34 billion CHF in 2012 (about Rs 9,514 crore), despite a global initiative against the alpine nation’s banking secrecy laws.

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