FEMA,Money laundering,case studies The Foreign Exchange Management Act, 1999 (FEMA) Prevention of Money Laundering Act, 2002

1. FEMA
&
MONEY LAUNDERING

2. FOREIGN
EXCHANGE
MANAGEMENT
ACT (1999)
FERA WAS REPLACED BY FEMA in 1999

3. FEMA
HOW IS IT DIFFERENT ?
1. Simple & consists of only 49 sections.
2. Introduction of terms like
Capital Account Transaction,
Current Account Transaction.
3. Offence is now considered as a civil offence.
4. Penalty-‘3’ times the amount involved.
5. IMPRISONMENT only when one fails to pay the
penalty.

4. FEMA
PRIME OBJECTIVES
1.To facilitate external trade and payments.
2.To promote the orderly development and
maintenance of foreign exchange market.

5. FEMA
RULES & REGULATIONS
1) Vital role of RBI in administration of FEMA.
2) Rules, regulations & Norms laid down by RBI in consultation with the Central
Government.
3) The Act prohibits any person who-
a) Deal in or transfer any foreign exchange or foreign security to any person not
being an authorized person.
b) Make any payment to or for the credit of any person resident outside India in
any manner.
c) Receive otherwise through an authorized person, any payment by order or on
behalf of any person resident outside India in any manner

6. FEMA
BABA RAMDEV !!
• Case was filed against baba Ramdev trust on the basis of
a RBI report.
• According to the report , ED officials have found alleged
FEMA violations amounting to around Rs.7-8 crore.

7. FEMA VIOLATION
Patanjali Yogpeeth Trust exported Ayurvedic medicines and
other products but did not inform the RBI about the money they were
supposed to receive in exchange.
 Enforcement directorate also got in touch with the Punjab National Bank,
which runs the trust's account.
 Suspicious purchase of an island in Scotland, which the yoga guru claims
was "gifted" to him by an NRI couple.
 Agency requested UK authorities to furnish details on funding related
aspects of the island
 ED also looks into the flow of money into different trusts run by Ramdev
and his aides.
 US, New Zealand and Britain in contravention of FEMA guidelines.

8. MONEY LAUNDERING

9. MONEY LAUNDERING HAWALA

10. MONEY LAUNDERING
1. Definition
2. Act (2009)
3. Penalty

11. HOW DO THEY DO IT ?
Low profile
Main business + M L
Over shore account
Delivery of Goods
Fool proof Coding & Decoding

12. FEMA VIOLATION BY IAS COUPLE !
DATED JAN 13 ,2015
 Tainted IAS couples - Tinoo Joshi and Arvind Joshi
 What actually happened ?!!
 Owned properties exceeding 3151% of their known
source of income.
 Income tax department unearthed Disproportionate
assets valued at Rs 360 crore.

13.  FEMA violation : Income tax appraisal and final assessment report,
the names of Arvind Joshi's two sisters — Abha and Vibha Patel —
settled in the US and UK also figured
 Of the properties revealed during raid included 402 acres of
agricultural land valued at several hundred crores in Bhopal
 Enforcement Directorate (ED) had registered a complaint under
Prevention of Money Laundering Act (PMLA) against Joshi couple
under FEMA because it is illegal for NRIs to own agricultural land

14. HASAN ALI KHAN
THE BILLION DOLLAR BANDICOOT

15. FROM SCRAPS TO SWISS BANK
Entrepreneur with annual income of 30 lakh.
US $8 billion stacked away in UBS Zurich, Switzerland
 RS.50,000 crore ED imposed on him as tax.
Name linked to worlds biggest arms dealer Adnan
Khashoggi.
Total income from 2001-2008 1trillion rupees.
Currently in jail pending trial.

16. MONEY LAUNDERING
PHASES
Placement
Layering
Integration

17. THE 2G SCAM

18. LAYERING TO INTEGRATION
The ED has also named Swan Telecom Pvt Ltd, Kusegaon Realty Pvt Ltd
(formerly known as Kusegaon Fruits and Vegetables Pvt Ltd), Cineyug
Media and Entertainment Pvt Ltd (formerly known as Cineyug Films Pvt Ltd),
Kalaignar TV Pvt Ltd, Dynamix Realty, Eversmile Construction Company Pvt
Ltd, Conwood Constructions and Developers (P) Ltd, DB Realty Ltd and
Nihar Constructions Pvt Ltd as accused in the case.

19.  The licenses were being sold below their market value.
 Swan Telecom bought a license for Rs. 1537 crore. Sold 45% of the
company to Etisalat for Rs. 4200 crore.
 Unitech Group, purchased a license for Rs. 1661 crore and the
company board soon after sold a 60% stake for Rs. 6200 crore to
Telenor.
 Nine companies purchased licenses and collectively paid Rs.
10,772 crore. The amount of money expected for this licensing by
the Comptroller and Auditor General of India was 1,76,700 crore.

22. THANK YOU !
Thank You