As of December, 2011, the Finance Ministry has refused to reveal the names, for privacy reasons, though they did confirm that no current Members of Parliament are on the list. The Swiss Ministry of External Affairs has confirmed these figures upon request for information by the Indian Ministry of External Affairs. This amount is about 700 fold less than the alleged $1.4 trillion in some media reports $500 billion of illegal money was an estimate based on a statement made to India&apos;s Supreme Court in July 2011.
Placement –This is the movement of cash from its source. On occasion the source can be easily disguised or misrepresented. This is followed by placing it into circulation through financial institutions, casinos, shops, bureau de change and other businesses, both local and abroad Currency Smuggling – This is the physical illegal movement of currency and monetary instruments out of a country. The various methods of transport do not leave a discernible audit trail FATF 1996-1997 Report on Money Laundering Typologies. Bank Complicity – This is when a financial institution, such as banks, is owned or controlled by unscrupulous individuals suspected of conniving with drug dealers and other organised crime groups. This makes the process easy for launderers. The complete liberalisation of the financial sector without adequate checks also provides leeway for laundering. Currency Exchanges – In a number of transitional economies the liberalisation of foreign exchange markets provides room for currency movements and as such laundering schemes can benefit from such policies. Securities Brokers – Brokers can facilitate the process of money laundering through structuring large deposits of cash in a way that disguises the original source of the funds. Blending of Funds – The best place to hide cash is with a lot of other cash. Therefore, financial institutions may be vehicles for laundering. The alternative is to use the money from illicit activities to set up front companies. This enables the funds from illicit activities to be obscured in legal transactions. Asset Purchase – The purchase of assets with cash is a classic money laundering method. The major purpose is to change the form of the proceeds from conspicuous bulk cash to some equally valuable but less conspicuous form.
Cash converted into Monetary Instruments – Once the placement is successful within the financial system by way of a bank or financial institution, the proceeds can then be converted into monetary instruments. This involves the use of banker’s drafts and money orders. Material assets bought with cash then sold – Assets that are bought through illicit funds can be resold locally or abroad and in such a case the assets become more difficult to trace and thus seize.
Integration – This is the movement of previously laundered money into the economy mainly through the banking system and thus such monies appear to be normal business earnings. This is dissimilar to layering, for in the integration process detection and identification of laundered funds is provided through informants. The known methods used are: Property Dealing – The sale of property to integrate laundered money back into the economy is a common practice amongst criminals. For instance, many criminal groups use shell companies to buy property; hence proceeds from the sale would be considered legitimate. Front Companies and False Loans – Front companies that are incorporated in countries with corporate secrecy laws, in which criminals lend themselves their own laundered proceeds in an apparently legitimate transaction. Foreign Bank Complicity – Money laundering using known foreign banks represents a higher order of sophistication and presents a very difficult target for law enforcement. The willing assistance of the foreign banks is frequently protected against law enforcement scrutiny. This is not only through criminals, but also by banking laws and regulations of other sovereign countries. False Import/Export Invoices – The use of false invoices by import/export companies has proven to be a very effective way of integrating illicit proceeds back into the economy. This involves the overvaluation of entry documents to justify the funds later deposited in domestic banks and/or the value of funds received from exports.
The Director General of Income Tax (International Taxation) is in charge of taxation issues arising from cross-border transactions and transfer pricing. This organisation has been in operation for nearly 50 years, is primarily responsible for combating the menace of black money, has offices in more than 800 buildings spread over 510 cities and towns across India and has over 55,000 employees and even employees who are deputed from premier police organisations to aid the department. Enforcement Directorate: was established in 1956. It administers the provisions of the Foreign Exchange Regulation Act of 1973 (FERA), later updated to Foreign Exchange Management Act of 1999 (FEMA). It is entrusted with the investigation and prosecution of money-laundering offences, confiscation of the proceeds of such crime, matters related to foreign exchange market and international hawala transactions. This India-wide directorate, with focus on major financial centres in India, has 39 offices and 2000 employees. Financial Intelligence Unit: has been operating as a separate investigative entity since 2004. This government organisation for receiving, processing, analysing, and disseminating information relating to suspect financial transactions. It shares this information with other ministries, enforcement and financial investigative agencies of state and central government of India. Every month, it routinely examines about 700,000 investigative reports and over 1,000 suspect financial transaction trails to help identify and stop black money and money laundering.
Central Board of Excise and Customs and Directorate of Revenue Intelligence: is the apex intelligence organisation responsible for detecting cases of evasion of central excise and service tax. It maintains close liaison with the World Customs Organisation, Brussels, the Regional Intelligence Liaison Office at Tokyo, INTERPOL, and foreign customs administrations. Central Economic Intelligence Bureau: functions under India&apos;s Ministry of Finance. It is responsible for coordination, intelligence sharing, and investigations at national as well as regional levels amongst various law enforcement agencies to prevent financial crimes, generation and parking of black money and illegal transfers. In addition to the primary agencies listed above, India has 10 additional separate departments operating under the central government of India - such as National Investigation Agency and National Crimes Record Bureau - to help locate, investigate and prosecute black money cases. Discovery and enforcement is also assisted by India&apos;s Central Bureau of Investigation and state police. In addition to direct efforts, the Indian central government coordinates its efforts with state governments with dedicated departments to monitor and stop corporate frauds, bank frauds, frauds by non-banking financial companies, sales tax frauds and income tax-related frauds.
Indian Money at Swiss Banks
Group 9, Division A
V Rameshwar Rao
Switzerland is not a member of the NATO, nor a member of the European
Union. The rights of the individual Swiss citizens are protected by three
1.A Weak Chief Executive
Two largest banks of Switzerland are Union Bank of Switzerland and
Credit Suisse Group which together account for over 50 percent of the
balance sheet total of all banks in Switzerland.
Regional and local
• Code of secrecy is over 300 years old
• The first Swiss banking clients were the kings of France
• The Great Council of Geneva, in 1713, established
• Bank secrecy was regulated only by civil law at that time.
• Divulging Client Information become Criminal Offence
Two Main Reasons:
•French Scandal with Basler Handelsbank
orld W II
Jews Dormant Money
In 1984, the people of Switzerland once again voted in favor of
maintaining bank secrecy by a whopping 73 percent.
Anti money laundering laws have been incorporated into the Swiss
Criminal Code in 1990`s
oney in Swiss B
W Swiss banks are
counted as safest banks
in the world ?
1. Switzerland has had an extremely stable economy and
infrastructure for many years.
2. Swiss bankers are also highly trained in investing and
know how to grow your money.
3. Swiss franc is considered one of the world's premier
currencies with virtually zero inflation and has been
historically backed by at least 40 percent gold reserves.
4. Swiss banks are also known to have very sophisticated
investment services and Internet banking.
5. Swiss law forbids bankers to disclose the existence
of your account without your consent
6. In Switzerland, if a banker divulges information about
a bank account without permission, immediate
prosecution is begun by the Swiss public attorney
7. Bankers face up to six months in prison and a fine of
up to 50,000 Swiss francs
and the L
•Article 47 of the Federal Law ,1934
In following cases there is a duty for bankers to provide
information regarding bank account.
•Civil proceedings (such as inheritance or divorce)
•Debt recovery and bankruptcies
•Criminal proceedings (money laundering, association with a
criminal organization, theft, tax fraud, blackmail, etc.)
•International mutual legal assistance proceedings
The Swiss Federal Banking Commission (SFBC) may
communicate information only to the supervisory authorities in
foreign countries subject to three statutory conditions:
1.The information given can't be used for anything other than
the direct supervision of the banks and can't be passed on to
2.The requesting foreign authority must itself be bound by
official or professional confidentiality and be the intended
recipient of the information.
3.The requesting authority may not give information to other
authorities or to other public supervisory bodies without the
prior agreement of the SFBC
Why world invests
in SWISS BANKS?
Swiss bank accounts are used by :-
• Corrupt Government officials
•Criminals to hide ill-gotten wealth
• Middle class people
• People staying in countries with unstable
hat is B
In India, B
lack money refers to funds earned on the
black market, on which income and other taxes has not
been paid. The total amount of black money deposited
in foreign banks by Indians is unknown. Some reports
claim a total exceeding US$1.4 trillion are stashed in
Switzerland. Other reports, including those reported by
Swiss Bankers Association and the Government of
Switzerland, claim that these reports are false and
fabricated, and the total amount held in all Swiss banks
by citizens of India is about US$2 billion.
Black Money in India
•In 2011, the Indian government received the names of 782 Indians who had
accounts with HSBC.
•According to White Paper on Black Money in India report, published in May
2012, Swiss National Bank estimates that the total amount of deposits in all
Swiss banks, at the end of 2010, by citizens of India were CHF 1.95 billion
(INR 9,295 crore, US$ 2.1 billion).
•In May 2012 that the deposits of Indians in Swiss banks constitute only 0.13
per cent of the total bank deposits of citizens of all countries. Further, the share
of Indians in the total bank deposits of citizens of all countries in Swiss banks
has reduced from 0.29 per cent in 2006 to 0.13 per cent in 2010.
•The Ministry of Finance through the
Investigation Division of the Central Board of Direct Taxes released a White
Paper on Black Money giving the Income Tax Department increased powers.
Methods & Stages
There are three stages involved in money laundering;
placement, layering and integration.
The process of placement can be carried out through many
Curre ncy Smug g ling
B Co mplicity
Curre ncy Exchang e s
Se curitie s B ke rs
B nding o f Funds
A t Purchase
Layering – The purpose of this stage is to make it more difficult to detect
and uncover a laundering activity. It is meant to make the trailing of illegal
proceeds difficult for the law enforcement agencies. The known methods
Cash converted into Monetary Instruments – Once the placement is
successful within the financial system by way of a bank or financial
institution, the proceeds can then be converted into monetary instruments.
This involves the use of banker’s drafts and money orders.
Material assets bought with cash then sold – Assets that are bought through
illicit funds can be resold locally or abroad and in such a case the assets
become more difficult to trace and thus seize.
Integration – This is the movement of previously laundered money into
the economy mainly through the banking system and thus such monies
appear to be normal business earnings. This is dissimilar to layering, for in
the integration process detection and identification of laundered funds is
provided through informants. The known methods used are:
Pro pe rty De aling .
Fro nt Co mpanie s and False Lo ans
Fo re ig n B Co mplicity
False I rt/Expo rt I ice s
Hasan Ali Case –
asan Ali K
han (born c. 1954) is an Indian businessman. In 2007, Indian authorities
began investigating Khan for suspicion of money laundering. He allegedly stashed
away billions into Swiss bank accounts with the help of Kolkata based businessman,
Kashinath Tapuria using hawala.
Hasan Ali was arrested by Enforcement Directorate and the Income Tax Department
on charges of stashing over 36,000 crore in foreign banks. ED lawyers said Khan had
financed international arms dealer Adnan Khashoggi on several occasions.
India Today claimed that it had verified a letter confirming the US$8 billion in black
money was in a Swiss bank UBS account, and the government of India too has verified
this with UBS.
Regulation & Monitoring
of Black Money
oard of Direct T
axes: is a statutory authority functioning across India under the
Central Board of Revenue Act of 1963. The Member(Investigation) of the CBDT,exercises
control over the Investigation Division of the Central Board of Direct Taxes. The Member
Directorate General of Income Tax Investigation
Directorate of Income Tax Intelligence and Criminal Investigation.
Chief Commissioner of Income Tax Central.
The Director General of Income Tax (International Taxation) is in charge of taxation issues arising from
cross-border transactions and transfer pricing. This organisation has been in operation for nearly 50 years, is
primarily responsible for combating the menace of black money, has offices in more than 800 buildings
spread over 510 cities and towns across India and has over 55,000 employees and even employees who are
deputed from premier police organisations to aid the department.
inancial Intelligence Unit
oard of E
xcise and Customs and Directorate of Revenue Intelligence
conomic Intelligence B
In addition to the primary agencies listed above, India has 10 additional
separate departments operating under the central government of India - such
as National Investigation Agency and National Crimes Record Bureau - to
help locate, investigate and prosecute black money cases. Discovery and
enforcement is also assisted by India's Central Bureau of Investigation and
In addition to direct efforts, the Indian central government coordinates its
efforts with state governments with dedicated departments to monitor and
stop corporate frauds, bank frauds, frauds by non-banking financial
companies, sales tax frauds and income tax-related frauds.
MC Joshi Committee
on Black Money
Government appointed a high-level committee headed by MC Joshi the then CBDT Chairman in
June 2011 to study the generation and curbing of black money. The committee finalised its draft
report on 30 January 2012. Its key observation and recommendations were:
The two major national parties (an apparent reference to Indian National Congress, BJP) claim to
have incomes of merely 500 crore (US$77 million) and 200 crore (US$31 million). But this isn’ t
"even a fraction" of their expenses. These parties spend between 10000 crore (US$1.5 billion)
and 15000 crore (US$2.3 billion) annually on election expenses alone.[
Change maximum punishment under Prevention of Corruption Act from the present 3, 5 and 7
years to 2, 7 and 10 years rigorous imprisonment and also changes in the years of punishment in
the Income Tax Act.
T Information E
To curb black money, India has signed TIEA with 13 countries -Gibraltar, Bahamas,Bermuda,
the British Virgin Islands, the Isle of Man, the Cayman Islands, Jersey,Liberia,Monaco,Macau,
Argentina,Guernsey and Bahrain - where money is believed to have been stashed away. India
and Switzerland, claims a report, have agreed to allow India to routinely obtain banking
information about Indians in Switzerland from the 1st April 2011
The few names of the Swiss bank Account holders, which are displayed below include names of prominent
public figures and people from the corporate world. Though the wiki leaks have claimed another 985 Indian
Account holders in Swiss banks. Some of the prominent names appearing are
ehta[ 28,000 crore],,
asvan[3500 cr.],Neara Radiya[2,89,990 cr.],
Rajeev Gandhi[1,98,000 cr.],
A Raja[7,800 cr.],
etan Parekh[8,200 cr],
Rendezvous Sports W
C.P rishnan Nair[4,520 cr.],
alu rasad Yadav[29,800 cr],
adhavrao Scindia[9,000 cr.],
Why world invests in SWISS BANKS?
According to the data provided by the Swiss banking association ,
India have more black money then the rest of the world combined.
• The black money market situation in India is epidemic. India
currently tops the least for monies in the entire world with almost US
$ 1,456 billion in Swiss banks(USD 1.4 trillion approximately) in the
form of unaccounted money.
ffect on India
Counterfeiting of Indian currency
Transnational organized crime
• Governments Efforts
– Prevention of Money-Laundering Act, 2002 came
into effect on 1 July 2005
– Proposed Indo-Swiss tax treaty
– Financial Action Task Force (FATF)
– Asia Pacific Group (APG)
– Egmont Group of Financial Intelligence Units