Forex scam busted: Exporter deposits ₹137crore, arrested from south Mumbai hotel
A source said that the modus operandi helps unscrupulous exporters in two ways: first, they convert their black money into white; second, they claim government incentives.Updated: Sep 07, 2017 09:57 IST
An exporter from Mumbai was recently arrested from a South Mumbai hotel by the Directorate of Revenue Intelligence (DRI) in connection with a scam involving misuse of currency declaration forms (CDF), which passengers coming into the country have to fill at airports. Officials suspect that the scam runs into several hundreds of crores.
Hiten Haria deposited approximately Rs137 crore in foreign exchange and allegedly forged CDFs to claim remittance for exported goods.
A source said that the modus operandi helps unscrupulous exporters in two ways: first, they convert their black money into white; second, they claim government incentives.
A senior bank official is also under the scanner of the agency for his alleged involvement. While he has not been arrested, but the agency is likely to question him shortly.
“It appears that Haria deposited laundered money in foreign exchange,” the DRI told the court in its remand application, a copy of which is available with HT.
“Remittances in foreign exchange were shown to have been received by these exporters. They mention in their CDFs that they have sold goods to some fictitious individuals or companies,” it added.
The DRI has already arrested eight people, including textile exporters, for claiming excise duty benefits from the government by showing fake CDFs. Haria is alleged to have received Rs10 crore in export incentives (called duty drawback).
His statement was recorded on Monday and Tuesday.
“Haria has stated that CDFs were forged/faked at his office by him and the same were submitted to banks for depositing foreign currency into the bank accounts,” the remand application read.
The DRI suspects that the bank official arranged forged CDFs and other documents. “This is a unique conspiracy to defraud the government of its legitimate revenues by misusing the benefits of export incentive scheme,” the agency told the court.
Filling in CDFs is mandatory if the value of foreign currency notes a passenger has exceeds $5,000 and if the aggregate of the foreign exchange (in the form of currency notes, bank notes, traveller cheques etc.) with a passenger exceeds $10,000.
ers — say a Nigerian travelling to the city to purchase garments from them. The signatures of the customs officials on the forms were forged, alleged the agency
These forms were then submitted to banks
The foreign currency declared in the CDF is purchased from the grey market and deposited in the bank account
Fraudsters show the money as earnings from exports
They claim duty benefits for the exported goods from the government
Investigations so far have revealed that the scam gathered momentum as it was more profitable than the hawala system
Under hawala , money is paid to a middleman in one country who then instructs his associate in another country to pay the final recipient after taking a commission
While the commission is Rs4 per dollar for a hawala transaction, through this CDF fraud it is a mere Rs1 per dollar, the investigations have revealed
DRI is investigating possible links with crime syndicates in Dubai and Africa
It has sent out an alert to banks asking them to closely verify deposits of foreign currency.
Why currency form scam is more profitable than hawala
Passengers need to produce currency declaration forms at an authorised bank or at a money changer’s at the time of conversion of foreign exchange into Indian rupees or vice versa.
Forms were filled by exporters under the name of fictitious passengers — say a Nigerian travelling to the city to purchase garments from them. The signatures of the customs officials on the forms were forged, alleged the agency.