It would remain a challenge to figure out what part of the black money is generated from criminal activities such as drug smuggling, arms deals, policy manipulations etc which have serious implications for national security, beyond just financial integrity.
However, there is one disturbing statistics that could give an idea of the growing proportion of money generated through such criminal activities.
Over 50 percent of the cases under Prevention of Money Laundering Act (PMLA) since it was notified on July 1, 2005 were registered in just the last one year. Under this act that deals with proceeds of criminal activities, the first conviction could be in the high profile scandal involving former Jharkhand chief minister Madhu Koda and his cronies who swindled out hundreds of crores. And the second major conviction could be in the 2G spectrum allocation scandal.
Between April 2013 and March 2014 the Enforcement Directorate registered 55 cases under PMLA. And in the ongoing financial year, ED could end up registering over 90 money laundering cases. In the previous eight years (2005 to 2013) just 49 cases were registered, and not one case has ended in conviction.
One of the reasons for the sudden jump could be better enforcement of PMLA, but what also cannot be ignored is the fact that many scandals have emerged in recent times. And in most of these scandals, the ED has been able to track down the proceeds of crime, which show the huge amount of kickbacks in each of the scandals.
In most of these cases while money laundering to distant tax havens is one of the activities, what is noticeable is the fact that much of the bribes and kickbacks have been moved around in India itself. There are several tactics used to move them around. Real estate is a key target of investment, while buying shares in private companies at exaggerated share values and offering unsecured loans are among the ways to move around black money or pay kickbacks. In sectors like real estate, black money is staggering, and a significant portion of it could be proceeds of various crimes such as kickbacks.
The SIT, to be headed by Justice MB Shah, is tasked with duties of investigation, initiation of proceedings and prosecution in cases of Hasan Ali and other matters involving unaccounted money, the cabinet statement had said. In Hasan Ali case, investigations have found that documents showing $8 billion deposits by him were forged.
The SIT would serve its full purpose if it were to put sharper focus on the criminal aspect of black money, especially in the Indian context. PMLA cases might be a good beginning to make.
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