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Govt to create economic offenders list for better crackdown on financial fraud

The move comes against the backdrop of an increase in number of bank frauds, investment scams, and other such misdemeanors. In some of these cases, the offenders fled the country.

business Updated: Jul 23, 2018 08:01 IST
P Suchetana Ray
P Suchetana Ray
Hindustan Times, New Delhi
Economic offenders,bank frauds,Investment scams
This will be the first step towards identifying those committing multiple economic offences and could be a potential fugitive.(File Photo)

The government wants to create a master list of all economic offenders in the country so as to sharpen its response to such offences, and to also prevent flight, and has asked all federal investigative and enforcement agencies to work together to create one, according to three officials in these agencies.

The move comes against the backdrop of an increase in number of bank frauds, investment scams, and other such misdemeanors. In some of these cases, the offenders fled the country.

The Central Economic Intelligence Bureau (CEIB) has been entrusted with the job, with agencies such as the Enforcement Directorate and CBI , capital markets regulator SEBI, the tax department, the customs department, and the Directorate of Revenue Intelligence providing inputs.

“This will be the first step towards identifying those committing multiple economic offences and could be a potential fugitive. This will lead to a coordinated and focused investigation in case a big scam is unearthed,” said an official in the tax department who asked not to be identified.

A threshold has been set for each agency and cases registered that involve amounts above that limit will be reported to CEIB. For example, customs will report cases registered for duty evasion of above Rs 1 crore. In the case of the tax department only raids conducted or authorised by the Central Board of Direct Taxes will be taken into account by CEIB.

“Most of our probe and enforcement agencies work in silos. So if a particular agency is investigating someone, a comprehensive list of economic offenders will help it know if the person on any other agency’s radar,” said an official in one of the enforcement agencies who asked not to be identified.

DRI and the tax department were already probing Nirav Modi since 2014 and 2017, respectively, this person added. “Access to this information by all investigation agencies could have further sharpened our response to Nirav Modi once he fled the country before the filing of an FIR by CBI,” said another official who also works in an enforcement agency, and who too did not wish to be identified. .

The list of offences that make a person an economic offender include violations of laws such as the Central Excise Act, Customs Act, Prevention of Money Laundering Act, Negotiable Instruments Act, the Reserve Bank of India Act, Prohibition of Benami Property Transactions Act and, of course, provisions of the Indian Penal Code.

“Improved coordination is always welcome but what is important is that information is passed on at the right time and timely action is taken against an offender. Otherwise the offender might be on the run even before enforcement action has began against him. For example, evasion of income tax will not lead to arresting the accused, but if there is information about other economic offences committed by the same accused, he can be arrested and the risk of his leaving the country does not arise ,” said MM Joshi, former chairman of Central Board of Direct Taxes.

First Published: Jul 23, 2018 07:18 IST