Suspected securities deals under economic intelligence agency scanner

Anticipating a rise in flow of black money ahead of upcoming Lok Sabha polls, financial intelligence agencies are keeping a strict watch on transactions in securities.

The Central Economic Intelligence Bureau (CEIB), lead agency under Finance Ministry to gather and disseminate intelligence related to financial crimes, has traced illegal flow of money through Private Placement Programme (PPP) which involves offering of securities to select individuals or groups, upto 50 in numbers, official sources said.

Besides, investment done through Participatory Notes or P-Notes, an instrument for overseas entities or individuals to invest in stock market here, is also being watched by the financial intelligence agency for any misuse, they said.

The PPP mode, which has emerged as a new method for converting black money into white, generally involves preferential allotment of securities contrary to Initial Public Offers (IPOs) for listing of firms, the sources said.

They said P-Notes are being misused to route black money for investment in stock market here.

A security is any stock, bond, debenture, certificate of interest or participation in any profit-sharing agreement or in any oil, gas, or other mineral royalty or lease among others.

Sources said these means of securities and equity related investments can be misused by people to transfer black money which can then be used during polls to lure voters.

"Strict vigil is being maintained on all suspected financial deals to keep black money out of the system. It is an ongoing exercise. The efforts will be further strengthened keeping upcoming polls in mind," a senior CEIB official said.