Rift Over Scope Of Bill On Money Laundering
The investigative agencies and the finance ministry are at loggerheads over the list of economic offences to be covered by the proposed bill against money laundering.
The investigative agencies are opposing the finance ministrys move to keep offences like overinvoicing, underinvoicing and illegal siphoning of funds from public limited companies out of the proposed bills purview.
A five-member committee set by the ministry to draft the bill is also divided on whether to fix the responsibility of any money laundering transaction on the banks. The committee includes representatives of the Enforcement Directorate (ED), Narcotics Control Board (NCB), the Reserve Bank of India (RBI) and the Central Board of Direct Taxes (CBDT).
The committee is scheduled to meet within the week to iron out the differences. But, the differences may delay the draft which has been changed thrice already. This would preclude tabling of the bill in the budget session of Parliament as was promised by finance minister P Chidambaram.
The ED has sought inclusion of these offences as well as central excise violations in the bill citing a Directorate of Revenue Intelligence (DRI) report. According to the report, most of the money laundering in the country is carried out rather by underinvoicing and overinvoicing in foreign exchanges, misuse of value-based and quantity-based advance licences besides hawala operations and not by drug trafficking or other criminal activities.
The proposed bill would seek to replace certain provisions of the Foreign Exchange Regulations Act (Fera). Most of the countries do not treat Fera violation as an offence, but have strong laws against money laundering.
The ministry is essentially trying to emulate the relevant laws in the United Kingdom and the United States of America.
On the issue of responsibility, the RBI has opposed the idea of fixing it on the banks in money laundering cases. However, most members feel that if in a particular money laundering case, connivance of a bank is found, then it should be held responsible, at least partly.