ED seizes 4.6cr forex in FEMA probe
The ED seized ₹4.6 crore in foreign currencies from five locations in Mumbai, investigating illegal forex activities by multiple money changers.
MUMBAI: The Mumbai unit of the Enforcement Directorate (ED) seized foreign currencies worth ₹4.6 crore during searches at five locations in the city, mainly at the premises of four entities that are Full-Fledged Money Changers (FFMC). The searches were conducted on Thursday as part of an ED investigation into suspected contravention of the Foreign Exchange Management Act (FEMA) in a case of alleged illegal sale and distribution of foreign exchange.
The investigation was initiated based on observations related to unusual financial activities during the financial year of 2022-23 in the forex business of one of the FFMCs under the scanner, M/s Kuntilaa Forex Pvt Ltd (KFPL), whose license was revoked by the Reserve Bank of India (RBI) in October 2023. “ED conducted the searches on the premises of KFPL, M/s Shagun Enterprises, M/s Capital India Finance Ltd and M/s MDB Tours and Forex Pvt Limited. During the operations, various incriminating evidence, electronic devices, foreign currencies of multiple countries equivalent to ₹4.6 crore were seized,” an ED official said.
The investigation revealed that bank accounts of M/s KFPL, M/s MDB Tours and Forex Pvt. Ltd and others were allegedly used to deposit cash and receive funds from various channels, which were used by FFMCs to purchase foreign currency in bulk from M/s Capital India Finance Ltd, an AD-Category-II licensee, according to ED sources. Thereafter, the said foreign currency was allegedly sold through unauthorised/illegal channels. The AD-Category-II refers to entities authorised by the RBI to deal in foreign exchange for specified purposes.
“There were cash deposits of more than ₹370 crore in the bank accounts of M/s KFPL during a short span of 14 months in 2022-23. The investigation revealed that M/s Capital India Finance Ltd was receiving hundreds of crores within a short period of time from various FFMCs, which did not have a history of such huge transactional volumes,” the ED official claimed. Many of such FFMCs’ licenses had been revoked by the RBI due to alleged non-compliance of guidelines and suspicious transactions, he added.