ED files case against Chinese national for money laundering via shell companies

The Enforcement Directorate (ED) has filed a money laundering case against Chinese national Luo Sang, who was living in India using a pseudonym Charlie Peng and is involved in alleged cross-border money laundering worth more than Rs 1,000 crore using shell companies and hawala, officials familiar with the development said on Monday.

Officials said the case has been registered against Peng under Prevention of Money Laundering Act (PMLA) on the basis of the Income Tax department’s action and a Delhi Police probe after the prime facie offence was established.

The agency will soon summon Peng and his associates for questioning, including hawala dealers, chartered accountants and bank officials who connived with him.

The investigations by multiple agencies – including the I-T department, Delhi Police and central intelligence agencies, have so far revealed that Peng’s alleged money laundering activities are linked to gathering information in India, an official who didn’t wish to be named said.

“We have information that Peng was sending packets carrying Rs 2 to 3 lakh to certain individuals in Tibetan settlements in Delhi including Majnu Ka Tilla. The packets were dropped off by the office boys of Peng. The accused persons involved were interacting on a Chinese app,” the officer said.

Investigations by Income Tax department has revealed that certain Chinese companies under scanner were issuing fake purchase orders for which bogus bills were raised by smaller Chinese companies having business in India.

The I-T department had acted against Peng (42) on August 11 and 12 on specific intelligence inputs during which it was found that he was handling finances several companies and made several trips to various states across India in the last few years. He was even carrying an Aadhar card, the second officer said.

Peng had allegedly created a web of sham companies to launder hawala funds to and from China in the past two-three years. He used import and export of medical and electronic goods and some other items as his front to mislead Indian authorities, the second officer said.

The Central Board of Direct Taxes in its statement on August 11 said, without naming a company, – “the subsidiary of Chinese company (linked to Peng) and its related concerns have taken over Rs 100 crore bogus advances from shell entities for opening businesses of retail showrooms in India.”

It said the searches were launched based on “credible inputs that a few Chinese individuals and their Indian associates were involved in money laundering and hawala transactions through a series of shell entities.”

“Search action revealed that at the behest of Chinese individuals, more than 40 bank accounts were created in various dummy entities, entering into credits of more than Rs 1,000 crore over the period,” the CBDT had said.