India to quantify black money, exhaustive study underway

Amid mounting pressure to unearth black money, the government on Sunday announced it has commissioned an in-depth study to quantify unaccounted income and wealth stashed within and outside the country in 16 months. The study has been undertaken by the country's three top level institutions which would also profile the activities used for money-laundering and identify the causes of black money and the sectors in which it is generated.

"So far, there are no reliable estimates of black money generated and held within and outside the country," the Finance Ministry, which commissioned the study, said.

The study will also suggest ways to detect and prevent unaccounted money, bringing it into the tax net.

Work on the study, which commenced in March, is being undertaken by the National Council for Applied Economic Research (NCEAR), National Institute of Public Finance and Policy (NIPFP) and National Institute of Financial Management (NIFM).

The first study on unaccounted money was conducted by NIPFP way back in 1985.

The ministry said that the estimates, which are not reliable, vary from USD 462 billion to USD 1.4 trillion.

Even as a joint panel of ministers and social activists, including Anna Hazare is working on the draft Lokpal Bill, yoga guru Ramdev has threatened to go on huger strike here from June 4 on the issue of black money.

The government has also constituted a committee of high-level officials, including the chief of the Central Board of Direct Taxes (CBDT), to suggest a legal framework for confiscating such wealth by declaring it as "national assets".

Last week, senior officials of CBDT met Ramdev to explain measures taken to bring back blackmoney back in the country.

The Government had earlier also constituted a committee, comprising heads of various probe agencies and specialised departments, to monitor the investigation and initiate steps to bring back black money stashed in tax havens.

Besides, the Government is also amending the existing Double Taxation Avoidance Agreements (DTAAs) with different countries and entering into Tax Information Exchange Agreements (TIEA) with tax havens.

Earlier, finance minister Pranab Mukherjee had said that the Government has adopted a five pronged strategy, including legislative reforms, to deal with the menace of black money.

Source: Hindustan Times

US offers assistance to India in dealing with money laundering

The US today offered assistance to India to deal with money laundering and fake currency menace, besides cooperation in issues related to cross-border terrorism.

The visiting Secretary of the US Department of Homeland Security (DHS) Janet Napolitano called on Finance Minister Pranab Mukherjee here and the two leaders explored the areas of bilateral cooperation.

"Napolitano sought cooperation and offered assistance in money laundering, counterfeiting of currency, cross-border terrorism, cyber security, secured cargo...," a Finance Ministry statement said.

In the meeting, Mukherjee stressed on the need for cooperation in investigations relating to money laundering, drug-money flow, stashing of black money abroad and transfer-pricing mechanism.

The two sides also decided to establish a new chapter in US-India cooperation in various areas relating to Finance Ministry with particular emphasis on Customs issues.

"[The two also] noted the excellent cooperation between Indian Customs and US Customs and agreed to explore new areas of mutual interest to safeguard the security of the global supply chain," the release said.

Black money has become a big political issue in the country, with the opposition accusing the government of not doing enough to bring back the illegal money stashed abroad.

Source: Press Trust of India

India faces money laundering, terrorist financing risk: IMF

India, which has witnessed numerous terror attacks and still remains a potential target for such strikes, faces significant money laundering and terrorist financing risk, the IMF has warned.

The International Monetary Fund in its report "India: Observance of Standards and Codes FATF Recommendations for Anti-Money Laundering and Combating the Financing of Terrorism" however appreciate the steps taken by New Delhi to counter money laundering and terrorist financing.

The report dated July 2010 was released Monday. "As a leader among the emerging economies in Asia with a strongly growing economy and demography, India faces a range of money laundering and terrorist financing risks," it said.

"The main sources of money laundering in India result from a range of illegal activities committed within and outside the country, mainly drug trafficking; fraud; counterfeiting of Indian currency; transnational organised crime; human trafficking; and corruption," the report said.

"India continues to be a significant target for terrorist groups and has been the victim of numerous attacks. There are no published figures of terrorist cells operating in the country," it said.

Based on a threat assessment, India has identified the following major sources for terrorist financing (FT): funds/resources from organisations outside India, including foreign NPOs; counterfeiting of currency; and criminal activities including drug trafficking and extortion.

According to the report, since mid-2009, India has increased its focus on money laundering and the use of the money laundering (ML) provisions. However, there are still some important and in some instances, long-standing legal issues, such as the threshold condition for domestic predicate offences, that remain to be resolved.

Effectiveness concerns are primarily raised by the absence of any ML convictions, it said. Key recommendations made to India include the need to: address the technical shortcomings in the criminalisation of both money laundering and terrorist financing and in the domestic framework of confiscation and provisional measures; broaden the CDD obligations with clear and specific measures to enhance the current requirements regarding beneficial ownership.

It also recommended India to improve the reliability of identification documents, the use of pooled accounts, PEPs, and non-face-to-face business; ensure that India Post, which recently became subject to the PMLA, effectively implements the AML/CFT requirements; and enhance effectiveness of the STR reporting regime.

The report recommended India to enhance the effectiveness of the financial sector supervisory regime and ensure that India Post is adequately supervised. It also asked to ensure that the competent supervisory authorities make changes to their sanctioning regimes to allow for effective, proportionate and dissuasive sanctions for failures to comply with AML/CFT requirements; and extend the PMLA requirements to the full range of DNFBPs, and ensure that they are effectively regulated and supervised.

Source: Deccan Herald

ED may file money laundering case against Jagan

The Enforcement Directorate (ED) may file a money laundering case against YS Jagan Mohan Reddy and some of his associates, days after the CBI searched various premises belonging to the Kadapa MP.

The Directorate is understood to have made a discreet probe trailing the funds pumped by the MP and son of former Andhra Pradesh chief minister YS Rajasekhara Reddy and his associates into the companies owned by them.

The agency, according to sources, has gone through some official documents of transactions as part of its investigation under the provisions of the Prevention of Money laundering Act (PMLA).

The CBI has already registered a case against Reddy on the instructions of Andhra Pradesh High Court under relevant sections of the IPC pertaining to cheating, criminal conspiracy, criminal breach of trust and under provisions of Prevention of Corruption Act.

The CBI said searches were conducted at Hyderabad, Bangalore, Chennai, Kolkata, Rajkot, Delhi and Mumbai in this connection.

"The CBI has registered a case...against a Member of Parliament from Andhra Pradesh, and others, on the orders of High Court of Andhra Pradesh...on the allegation that the investors invested in the companies owned and promoted by the MP at very high premiums as a quid-pro-quo for the favours doled out by the then chief minister of Andhra Pradesh," a CBI spokesperson had said.

Source: IBN

Govt must seized black money stashed in Swiss banks

CPM politburo member S R Pillai, while demanding confiscation of black money stashed in Swiss bank accounts, has said check on corruption will be the main slogan of anti-price rise agitation to be launched from February 9 to 20 by ten Left and secular parties.


Talking to the newsmen here on Sunday, Pillai said the failure of the UPA-II government at the Centre in unearthing black money stashed in Swiss banks and other tax havens has been exposed by the recent observations of the Supreme Court. He said unaccounted and ill-gotten wealth, amassed through tax evasion, money laundering and other illegal means, kept in Swiss banks should be directly confiscated by the Centre.

While maintaining that common people were suffering due to the relentless increase in the prices of food items, Pillai said onions and vegetables had gone out of the reach of the common people.

"Food inflation remains unbearably high. Yet, the UPA government remains callous to the plight of the people. False assurances are given that the prices will come down within a short period. The ministers in the UPA government are giving contradictory statements regarding price rise and ways to tackle it," he added.

He said since deregulation, petrol prices have been hiked seven times leading to 20 per cent rise in petrol prices and adedd oil companies had increased the price of petrol twice in a month.The hike amounts to a steep Rs 5.50 per litre, he said.

Source: The Times of India

India to set up criminal investigation unit by May

The Finance Ministry is likely to set up Directorate of Criminal Investigation, a specialised wing to probe cases of black money, money laundering and terror funding, by the end of this month.

"A dedicated unit called Directorate of Criminal Investigation will look into the nexus between black money (which is illegally acquired), money laundering, and in extreme cases, terror funding. The Directorate would be notified within this month", a Finance Ministry official told PTI.

The specialised wing -- Directorate of Criminal Investigation (Income Tax)-- will be manned by hand-picked officers who are experts in financial and forensic investigations.

The I-T department, which has unearthed about Rs 30,000 crore black money in the past two years, has begun putting necessary infrastructure for the new unit.

Finance Minister Pranab Mukherjee gave his approval for the creation of the new unit earlier in the month. The new wing will help in expediting investigations of big-ticket cases and track illegal financial transactions in India and abroad, sources said.

Under the provisions of the new Direct Taxes Code (DTC) which is set to replace the I-T Act by next year, the department, with the operationalisation of this elite unit, will have powers to investigate and summon for evidence, on the lines of the Enforcement Directorate and the CBI .

The new unit will enable the department to deploy additional intelligence and investigation tools to detect and combat terror financing, money laundering, offshore tax evasion and other illegal trades which impact national security.

The creation of the new unit comes in the backdrop of a new plan of action developed by the Finance Ministry for the I-T department, keeping in view the multitude of financial scams in the country and ramifications of national security through illegal funding and Hawala dealings.

Source: ET

Germany agrees to share information about secret bank accounts Read more: Germany agrees to share information about secret bank accounts

German has assured finance minister Pranab Mukhejee that it would pass on information about Indian citizens holding secret bank accounts.

The assurance came at a bilateral meeting between Mukherjee and German finance minister Wolfgang Schaeuble on the sidelines of the meeting of the G20 finance ministers and central bank governors that concluded here on Saturday.

Mukherjee appreciated the role of Germany in providing information about Indian citizens having secret bank accounts in the LGT bank of Liechtenstein.

Germany has earlier provided names of some Indians having secret accounts in the Liechtenstein Bank.

"German finance minister ... assured him (Mukherjee) that as and when they have such information, they will pass it on to the Indian government", said a release.

Germany, it added, has also agreed to revise Double Taxation Avoidance Agreement (DTAA) and incorporate clauses to facilitate exchange of information between the law enforcement agencies of the two countries.

The negotiations to amend the DTAA will start soon, the release said, adding Mukherjee has requested for early amendments to the tax treaty.

Under the existing treaty, Germany cannot share information for non tax purposes.

German tax authorities, Mukherjee added, need to share information with India's Enforcement Directorate, a body that deals with offences relating to violation of foreign exchange laws.

Raising similar issues with French minister for economy, industry and employment Christine Lagarde, Mukherjee said there was need to put pressure on tax havens to share information to prevent money laundering.

Mukherjee also recalled the commitment of the French minister to share information on Indian monies in Swiss banks, the release said.

The finance minister asked his French counterpart to initiate early negotiations for amending the DTAA between the two countries.

Lagarde said the French team was working on the amendment proposed by India on the DTAA and the issue of providing information for tax purposes would be discussed shortly with Indian administration.

The two leaders also discussed a number of bilateral and multilateral issues and underlined the need for greater engagement between the two countries in the fields of energy, nuclear power, water treatment etc.

Source: The Times of India

How India's banks are used to fund terror

As India battles unabated terror acts on its soil it has discovered a worrying trend of country's banks being potentially used to funnel money by various terrorist organizations in the country.

Maharashtra leads among states in reporting of suspicious transactions with about one-third of such cases being reported from the state. A finance ministry internal report found out that banking companies reported a maximum of 11,840 suspicious transactions between 2006 and 2010. Financial institutions and intermediaries followed with 2,872 and 2,497 suspicious transactions reported respectively during 2006-10.

The report illustrates growing fear of penetration of terror outfits in the banking and financial system of the country. The finance ministry's Financial Intelligence Unit (FIU) has been entrusted with the task to tabulate all Suspicious Transaction Report (STR). FIU is an independent body reporting directly to the Economic Intelligence Council (EIC) headed by the Finance Minister.

Under the Prevention of Money Laundering Act (PMLA), 2002, a suspicious transaction includes a transaction that gives rise to a reasonable ground of suspicion that it might be involved in financing of the activities relating to terrorism.

The law defines such transactions as those involving funds suspected to be linked or related to or to be used for terrorism, terrorist acts or by a terrorist, terrorist organization or those who finance or are attempting to finance terrorism. But government does not conclude that all suspicious transactions would relate to terror acts since it lists several other parameters broadly under money laundering activities.

As per the FIU report over 17,000 suspicious transactions were recorded in all during 2006-2010. The STRs recorded during 2006-07 stood at 817, growing to 1,916 in 2007-08, 4409 in 2012-01 and 10,067 in 2009-10 respectively.

In the banking sector that leads the list of suspicious transactions maximum 5479 STRs were reported by private banks in the country. Public sector banks, foreign banks, insurance companies and mutual funds too reported such transactions with 3878, 2403, 2063 and 1892 STRs recorded by them respectively.

The finance ministry, however, does not specify as to whether any action was taken on STRs recorded by its financial intelligence unit.Secretary, Prime Minister's Economic Advisory Council (PMEAC) K P Krishnan said without mapping the finance ministry information with security data STR report would not on its own lead to any firm conclusion. He argued, "STR report is based on the financial transactions so we cannot conclude and relate this with terrorist financing unless security data of investigative agencies gets clubbed with this."

Expressing concern over the issue, former finance secretary, E A S Sarma said, "As the reporting system has improved it is possible that the persons intending to take part in illegal transactions have chosen other routes like hawala, FII acquisition of equity in Indian companies, real estate acquisition in foreign countries, clandestine investments in mining in other countries and so on."

Former chief of Research and Analysis Wing (RAW), A S Dulat described the increase in suspicious transactions as a matter of grave concern for the government. He said, "If government's own report is pointing that illegal money is being transferred by these routes, so why aren't they stopping it? Government should take some early actions in this matter."

Among states, Maharashtra dominated with maximum 29% share in STRs reported in all sectors. Delhi and West Bengal also followed with 12.1 and 7.3% share respectively. Other significant states in terms of share in STRs were Gujarat and Uttar Pradesh at 6%, Tamil Nadu 5.7%, Punjab 5.1%, Karnataka 4.7% and Andhra Pradesh 4.4%. Bihar and Chattisgarh conceded least 1.1% of suspicious transactions between 2006 and 2010.

On the increasing suspicious transactions in states, Sarma added "Even though some states like Maharashtra, Delhi and West Bengal still occupy high ranking positions in terms of the number of STRs, there are other emerging states like UP, Punjab, Andhra Pradesh, Haryana and Kerala where the share is on the increase. One has to watch these states closely."

Krishnan at PMEAC pointed to lack of operational coordination among investigative agencies as the "biggest problem." He said, "Government should marry all the investigative agencies together so that they can share data with one another. Without any more delay government should immediately start the proposed NATGRID project to avoid terrorist activities in the country."

As per the Prevention of Money Laundering Act, 2002 every reporting entity is required to report suspicious transactions to FIU, within 7 working days on being satisfied that the transaction is suspicious.

Source: DNA INDIA by Pankaj Sharma

Mobile banking vulnerable to laundering, terror funding: RBI

Reserve Bank Governor D Subbarao today said mobile banking should be driven by banks, not telecom operators, considering money laundering

and terror financing threats.

"The Reserve Bank has a clear preference for the bank-led model," RBI Governor D Subbarao said at a Banking Technology Excellence awards function hosted by the Institute for Development and Research in Banking Technology (IDRBT).

"Given the growing concerns about money laundering and financing of terrorism, a bank-led model is decidedly safer and more sustainable," he said, adding, however, that a mobile operator-led model helps accelerate financial inclusion.

Subbarao also said the central bank wants financial inclusion to be more than just a remittance facility, which is only possible through banks.

"We want our customers to get minimum services like deposit insurance, access to affordable credit and the payment system which only banks can offer," he said.

However, the governor said that the RBI recognises that mobile telephony has an important role in the value chain and that it is keen that mobile service providers collaborate with banks to provide value-added services.

Speaking on the use of technology in banking, he said protection of customer information and confidentiality is on his priority list as there are growing concerns about the increase in cyber crimes, phishing-related frauds, identity fraud and misuse of customer information.

"We proposed to set up a working group on information security, electronic banking, technology risk management and tackling of cyber frauds," Subbarao said.

Further, the statistics about financial inclusion do not convey the true picture of the situation, he said.

"Even where bank accounts are claimed to have opened, verification has shown that a significant portion of these accounts are dormant. Very few conduct any banking transactions and even fewer receive any credit," he explained.

RBI has asked all domestic commercial banks, public and private, to prepare their own financial inclusion plan.

Source: The Economic Times

India: RBI issues warning on banking transactions with Iran

Perceiving a threat of money laundering and terror-financing in banking transactions with Iran, the Reserve Bank of India (RBI) has asked banks and other financial entities to be cautious in their dealings with entities and funds from the Middle East country.

The RBI circular issued to banks and other entities operating payment systems in India contained a global market caution notice issued by the Financial Action Task Force (FATF) on Iran.

The FATF is an inter-governmental body responsible for making policies at national and international levels to combat money laundering and terror-financing.

As per the FATF warning, all financial institutions have been advised "to give special attention to business relationships and transactions with Iran, including Iranian companies and financial institutions."

The FATF has also warned against efforts to bypass or evade counter-measures and risk mitigation practices and urged financial institutions to take into account the risk of money laundering and terror-financing when considering requests by Iranian financial institutions to open branches and subsidiaries in their jurisdiction.

A similar circular has been issued by market regulator Sebi to the stock exchanges, with the objective of ensuring that Indian markets are not used by Iran-based firms for money laundering or terror-financing activities.

In turn, the stock exchanges have asked brokers to ensure compliance with the Sebi circular.

India became a member of FATF last year. Following the nation's accession into the global body, it is required to follow the global standards prescribed by the FATF to check money laundering and terror-financing activities.

Paris-based FATF informs the central government of its member countries about all its cautionary notices and policies, which in turn are forwarded to the concerned enforcement and regulatory agencies.

The latest caution notice on Iran was issued by the FATF to the Indian government late last year. The notice was later forwarded to Sebi, based on which the regulator issued a circular to market intermediaries.

Iran has been subjected to various sanctions by the US and some European countries to thwart the flow of funds allegedly used to finance the country's nuclear weapon ambitions and sponsor terror-related activities. There have been demands in the US for all listed companies to mandatorily disclose their links with Iran.

In its latest notice, FATF has named Iran as a 'jurisdiction' for which the countries need to apply counter- measures to protect the international financial system from substantial money laundering and terror financing risks.

FATF said it will consider asking its members to strengthen counter-measures in February, 2011, if Iran fails to take any concrete steps in this regard.

Source: The Economic Times

India arrests hawala money laundering suspect Naresh Jain

British police suspect Naresh Kumar Jain, also wanted in Dubai, US and Europe, laundered millions for organised crime gangs

A multimillionaire suspected of being one of the world's leading underworld bankers is under arrest in India after a global manhunt involving British police.

The Serious and Organised Crime Agency (Soca) believes that Naresh Kumar Jain is responsible for laundering millions of pounds of profits from organised crime gangs in the UK over several years. His organisation has been under investigation in Britain since 2006, after inquiries into the cash flows of drug gangs and other criminal networks repeatedly identified his alleged network at the end of money transactions.

Jain, 50, was seized in New Delhi on Sunday, a year after he jumped bail on money laundering charges in Dubai, from where he allegedly ran his operations. Soca is now liaising with both Indian and Dubai police.

Labelled a criminal mastermind by alleged victims, Jain is suspected of laundering money for Albanian and Italian heroin dealers, and narcotics cartels in America, the United Arab Emirates, Pakistan and Britain, according to inquiries in Italy and the US. German and US police say Jain's operation has tentacles in all of the major drug and terrorism hotspots across the globe. He was also wanted by police in Spain and the Netherlands.

According to Soca and other international agencies, Jain is suspected of controlling a laundering system capable of moving $2.2bn (£1.35bn) a year. From Dubai he allegedly provided customers with funds in a country of their choice. It is claimed his network was so extensive and lucrative that he often did not have to physically move money, a fact that made his detection all the more difficult, according to an investigative source.

Ian Cruxton, deputy director of Soca, said: "This operation is part of Soca's long-term strategy targeting specialist money launderers based overseas. These networks pay no attention to cultural or geographical barriers and launder money for organised crime groups from any ethnic background or criminal businesses, particularly UK, Pakistani and Turkish nationals based in the UK and mainland Europe involved in drugs trafficking."

Jain, also known as Naresh Patel, was arrested in April 2007 by Dubai police after a year-long international investigation. Much of the money he allegedly moved was by hawala, an informal honour-based money transfer system primarily based in the Middle East, east Africa and southern Asia.

According to the US department of justice's drug enforcement agency, police in Dubai made a number of searches of his property after his arrest and recovered banking and wire transfer records demonstrating that he was directing money transfers through banks and exchange houses in Dubai, into bank accounts at a finance company in Manhattan. The accounts of the company showed he was involved in "layering," a money laundering technique designed to disguise the origin of sham commodities trades.

The US government obtained a seizure warrant for the funds in the accounts as property involved in money laundering and this year a district judge ordered the forfeiture to the US of more than $4.3m. A further £1.5m in cash from Naresh's business dealings has been held around the world.

A two-year investigation in Italy revealed an alleged trail that suggested Naresh was laundering $4m a day, with heroin and terrorism cash coming in through a beauty parlour in Italy. The Italians and Americans say he was at the centre of a sprawling terror network that was taking in money for the Taliban as well as other criminal cartels.

While inquiries were being made into his activities, Naresh was bailed in Dubai – where he faces trial for breaking foreign exchange laws – and fled his business headquarters. He resurfaced in his native India, where authorities raided several properties owned by him and issued an all ports alert.

Two months ago he denied any involvement in money laundering and claimed he was a businessman who was being trapped. Speaking in New Delhi, Naresh said: "I have a factory in South Africa. I supply ready-made garments in Afghanistan and Nepal. I talked to people in Pakistan in relation with purchasing rice."

British authorities have secured an exclusion order preventing Naresh from entering the UK.

Source: The Guardian

Indian Govt signs MoUs with three countries to fight terror financing

The MoUs will enable the country’s Financial Intelligence Unit to share information with foreign FIUs and to obtain information from them on money-laundering activities

The government has signed memoranda of understanding with Russia, Malaysia and Brazil this year for combating money laundering and terror financing.

Negotiations with more than 30 other countries is under process for enhancing international cooperation in fighting illegal routing of money for terror and Hawala like operations, a senior finance ministry official has said.

India has also signed MoUs in this regard with Mauritius and the Philippines in 2008.

The MoUs will enable the country’s Financial Intelligence Unit (FIU) — a government agency to investigate and disseminate information between financial and law enforcement agencies for identification of suspicious money laundering — to share information with foreign FIUs wherever considered necessary and reciprocally to obtain information from them on money-laundering activities, the official said.

The government, in the same context this year, received 69 requests of information from foreign financial intelligence units while it sent 17 such requests to other countries.

The Union government has also established Joint Working Groups (JWG) — comprising senior officials from enforcement agencies — with a number of countries like the US, Germany, the UK and Russia on various operational issues relating to terrorism and other crimes including money laundering and drug trafficking.

A joint meet was held with Russia this year, the finance ministry official added.

The FIU-IND in relation to foreign FIUs screens and processes requests from foreign FIUs, disseminates information to foreign FIUs, establishes and maintains relationship with foreign FIUs, and facilitates, administers and negotiates Memoranda of Understanding (MoUs) with foreign FIUs.

According to established government guidelines, the MoU envisages that the information or documents obtained from the respective authorities will not be disseminated to any third party, nor be used for administrative, prosecutorial or judicial purposes without prior consent of the disclosing Authority.

The information acquired will be treated as confidential and will be subject to official secrecy. The MoU also provides that authorities will jointly arrange, consistent with the legislation of their respective countries, for acceptable procedures of communication and will consult each other with the purpose of implementing the Memorandum, the guidelines state.

The guidelines further add that the authorities would not be under any obligation to give assistance if judicial proceedings have already been initiated concerning the same facts to which the request is related. Further, the MoU may be amended or revoked at any time.

Source: Live Mint

India vows to strengthen legal framework for counterterrorism

India today vowed to strengthen the global legal framework in the fight against terrorism after being entrusted with the responsibility of heading a key UN Security Council committee on counter-terrorism.

"Given its experience in the fight against menace of terrorism over more than two decades, India, during its chairmanship of the CTC, will work to further strengthen the international legal framework for counter-terrorism," India's Permanent Mission to the United Nations said in a statement.

Earlier in the day, the Indian Ambassador to the UN Hardeep Singh Puri was elected as the Chairman of the Security Council Counter Terrorism Committee.

"India will endeavor to increase international cooperation in the fight against terrorism by the UN member-states uniformly and without exception," the statement said.

"India will also seek to enhance cooperation among various international institutions and national authorities engaged in fighting terrorism that will help strengthen the implementation of best practices globally and will give adequate assistance for capacity-building of nation-states is fighting terrorism," said the Indian Mission.

Elected for a two-year term, Puri would chair the UN Security Council Counter-Terrorism Committee.

He replaces Ertugrul Apakan, Ambassador and Permanent Representative of Turkey, whose term expired on December 31, 2010.

The Counter Terrorism Committee , comprising all 15 Security Council members, is tasked with monitoring the implementation of resolution 1373, which requested all countries to implement a number of measures intended to enhance their legal and institutional ability to counter terrorist activities at home, in their regions and around the world.

These measures include criminalise the financing of terrorism, freeze without delay any funds related to persons involved in acts of terrorism, deny all forms of financial support for terrorist groups, suppress the provision of safe haven, sustenance or support for terrorists and share information with other governments on any groups practicing or planning terrorist acts.

It is also requests all countries to cooperate with other governments in the investigation, detection, arrest, extradition and prosecution of those involved in such acts; and criminalize active and passive assistance for terrorism in domestic law and bring violators to justice.

The committee is assisted in its work by the Counter-Terrorism Committee Executive Directorate (CTED), which also coordinates the process of monitoring the implementation of resolution 1373 (2001).

The Security Council Committee established pursuant to resolution 751 (1992) and 1907 (2009) concerning Somalia and Eritrea oversees the implementation of various measures, including arms embargo, travel ban and assets freeze, against the listed individuals and entities.

"Given the continuing security and political problems in the region, India will seek to actively promote full implementation of these measures," the Indian Mission said.

"India will bring its wide experiences in nation-building as well as those of its Navy in the fight against piracy to further international cooperation so that Somalia does not become safe haven for terrorists and pirates rather returns to normalcy and stability as early as possible," the statement said.

Source: ET

Indian Govt scans laws to plug dirty money routes

The government has started a swift but rigorous combing of all economic laws to fix loopholes that may allow dubious cross-border cash flow, terror funding and money laundering, as top officials from an influential global body that India wants to be part of arrive in the capital with some uneasy questions. Paris-based Financial Action Task Force (FATF), an inter-governmental body that sets global benchmarks on legislation to prevent terror funding and money laundering, is in New Delhi until December 11 to evaluate India’s legal muscle to prevent such activities.


At stake is much more than terror financing controls. India is keen to get an FATF membership, a government official explained, as it is a forum setting the global norms for cross-border flow of finance and even trade. India now has an observer status that will expire early next year.

Without an FATF membership, India will be forced to play second fiddle to the standards set by the 35-member body in which neighbouring China is also a member. Indian business entities, including banks that operate abroad, have to comply with FATF requirements enforced by the respective overseas governments to do business in their soil.

As part of the combing, on Monday the government gave a free hand to different investigative agencies, including the Enforcement Directorate, Central Bureau of Investigation, state police and even environment and forest officials, to conduct search, inspections, seizure and investigations inside special economic zones (SEZs) without permission from the development commissioner of a zone.

This was done by scrapping the instruction 34 issued as per the SEZ rules in August this year that prohibited these agencies from carrying out investigation inside SEZs without the commissioner’s nod. Investigating agencies often do not get DC’s approval for checking the consignments within SEZs, said an official with a detective agency, who asked not to be named.

The government’s combing of all economic laws for loopholes is aimed at satisfying itself that the country has enough legal and administrative teeth to catch and punish terror-funding individuals and agencies as FATF is making a crucial assessment of the effective-ness of the country’s legal system.

During the evaluation, the global body is also expected to assess other issues like the crime level in India, its exposure to money laundering and financing of terrorism, legal provisions for confiscation of consignments, rate of convictions and the quantum of penalty.

Source: The Financial Express

Satyam Wins Pegasystems Partner Innovation Award for AML Solution

October 30, 2007: 12:33 PM EST

HYDERABAD, India, Oct. 30 /PRNewswire/ -- Satyam Computer Services Ltd. , a leading global consulting and IT services provider, announced today that it won the 2007 Pegasystems Partner Innovation Award in financial services. The announcement was made at PegaWORLD 2007, Pegasystems' annual conference, and one of the business process management (BPM) industry's flagship events.

Satyam won the esteemed award for its advanced Anti-Money Laundering (AML) solution, which enables financial institutions to intelligently track, manage and quickly resolve potentially fraudulent and criminal activity with greater speed and accuracy and to comply with stricter AML regulations. Satyam used Pegasystems' SmartBPM(R) Suite to create the new solution, which addresses a critical and underserved need in the market.

"Financial institutions now have an innovative way to fight fraud and financial crime, as well as stay in compliance with BSA/AML/KYCC statutes," said Anil Kumar, the Global Head of Satyam's Financial Services Business.

Integration among Satyam experts accelerated the solution's development and deployment.

"Satyam's business process management and banking experts leveraged Pegasystems' SmartBPM platform to rapidly deliver an advanced solution without additional and costly software development," said Joseph Lagioia, head of Satyam's Consulting and Enterprise Solutions Practice. "We are very proud and pleased to win this prestigious honor."

Satyam's AML solution optimizes a financial institution's existing transaction-monitoring systems-detecting suspicious activity such as the deposit of very large sums, multiple accounts for the same person, and suspicious names-while at the same time minimizing the number of false positives, which has been a nagging problem in the past. The solution also allows financial institutions to recognize suspicious transactions quickly, rather than waiting until the end of the day, which is the norm for institutions using case management systems.

"Satyam combines superior subject matter expertise in financial services with deep understanding of Pegasystems technology to deliver truly innovative business solutions in an accelerated fashion," said Douglas Kim, managing director of Global Alliances and Business Development for Pegasystems. "We're proud of our long-standing relationship with Satyam and are delighted to recognize them with this award."

About Satyam

Satyam , a leading global business and information technology services company, delivers consulting, systems integration, and outsourcing solutions to clients in 20 industries and 57 countries.

Satyam leverages deep industry and functional expertise, leading technology practices, and an advanced, global delivery model to help clients transform their highest-value business processes and improve their business performance. The company's 45,700* professionals excel in engineering and product development, supply chain management, client relationship management, business process quality, business intelligence, enterprise integration, and infrastructure management, among other key capabilities.

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This press release contains forward-looking statements within the meaning of section 27A of Securities Act of 1933, as amended, and section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward- looking statements. Satyam undertakes no duty to update any forward-looking statements. For a discussion of the risks associated with our business, please see the discussions under the heading "Risk Factors" in our report on Form 6-K concerning the quarter ended June 30, 2006, furnished to the United States Securities Exchange Commission on July 28, 2006 and the other reports filed with the Securities Exchange Commission from time to time. These filings are available at http://www.sec.gov.

http://money.cnn.com/news/newsfeeds/articles/prnewswire/DCTU00430102007-1.htm

BIMSTEC agree on convention against terror

India and six other members of a grouping of South Asia and South East Asia today agreed to firm up by November a convention to deal collectively with terrorism which is haunting these two regions.

Under the proposed convention, the member-countries of Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) would cooperate in intelligence sharing, legal and law enforcement issues, combating financing of terrorism and prevention of illicit trafficking of narcotic drugs, psychotropic substances and precursor chemicals.

"We expressed the hope that the draft BIMSTEC Convention be finalised as soon as possible for signing during the next BIMSTEC Summit," said the grouping which comprises India, Bangladesh, Sri Lanka, Myanmar, Nepal, Bhutan and Thailand in a joint statement issued after Foreign Ministerial meeting here.

The next Summit is expected to be held here in November this year.

In the field of trade and investment, the grouping resolved to conclude the negotiations on trade in goods under the proposed FTA at an early date, preferably before the next BIMSTEC Summit.

The Ministerial meeting also approved memoranda of association for setting centres for energy, weather and climate in India, tourism working group and BIMSTEC joint working group. PTI

Source: The Press Trust of India

INDIA: Akhand Pratap confesses to money laundering

NEW DELHI: Former UP chief secretary Akhand Pratap Singh has reportedly confessed to the CBI that he had picked up substantial shares in Moradabad-based Venus Sugar, UP’s first sugar mill, and laundered crores of rupees through a fellow bureaucrat’s wife with whom he had an illicit relationship.

Singh, lodged in Tihar Jail, was granted bail by a local court on October 18 but the order was stayed by Delhi High Court on Monday. Sources said the CBI is likely to use Singh’s confessional statement before the HC on Tuesday to oppose the bail plea.

The CBI, meanwhile, seized a typewriter which was used by Singh to fabricate wills of his late father and a close relative to transfer properties in his daughter’s name. He also reportedly disclosed his role in the 1992-93 share scam during the Harshad Mehta bull run on the stock market. He told sleuths that he had sent at least Rs 1 crore through bank drafts to a broker in Calcutta Stock Exchange.

http://timesofindia.indiatimes.com/India/Akhand_Pratap_confesses_to_money_laundering/articleshow/2481725.cms

India: Are commodity markets funding terrorist activities?

Sreekumar Raghavan, Commodity Online

BANGALORE: Intelligence agencies still may not have the perfect answer as to how terrorist move their funds across borders. While it may be difficult to move funds across formal banking channels, it is likely that they may be using alternative, non-banking channels and commodities.

Several millions have been invested in US commod ponzi schemes none of which went into commodities-- CFTC has already taken action against many illegal operators but hasn't stated so far how the funds were utilized except in a few cases where they were used to buy luxury properties.

Global nature of money transactions through electronic means compounds the situation further although much of the assets of terrorists groups could also be held in such commodities as precious stones and gems.

The fact that there is real threat or possibility of commodity markets being used for financing terrorism is evident from the notices posted on Dubai Multi-Commodities Centre (DMCC) and US commodity markets regulator, Commodity Futures Trading Commission (CFTC).

DMCC has stated in its site that it is obligated to establish a set of policies to ensure that it does not finance terrorism or facilitate money laundering. It has also committed itself to support any domestic and international initiatives to combat financing of terrorism.

It was the bombing of World Trade Center in September 2001 that lead to a global call by USA for monitoring financing of terrorism activities. In USA, after the 9/11 incident, The Patriot Act was laws passed to prevent financing of terrorism through formal channels. It amended Bank Secrecy Act and is intended to strengthen U.S. measures to prevent, detect, and prosecute international money laundering and the financing of terrorism. These efforts include anti-money laundering (AML) tools that impact the banking, financial, and investment communities.

The CFTC website also has a notice to investors on safeguarding against financing of terrorism:

”Beware of promises of profits from commodity futures and options trading based on the events of September 11, 2001 and other public information relating to the war on terrorism.

Be alert to solicitations for transactions in commodity futures or options contracts based on claims that you can make a lot of money with little risk by trading in commodities affected by well-known current events, such as the attacks of September 11, 2001 and the war on terrorism.”

A US Government Accountabilty Office document of 2004 said that it faces several challenges in determining and monitoring the nature and extent of terrorists' use of alternative financing mechanisms.

Alternative financing mechanisms are outside the mainstream financial system and include the use of commodities (cigarettes, counterfeit goods, illicit drugs, etc.), bulk cash, charities, and informal banking systems to earn, move, and store assets.

In India, the Forward Markets Commission has set forth several pre-conditions for individuals or business entities to approving new commodity exchanges. But it is doubtful, how far the regulator and the exchanges have information regarding the source of funds flowing into commodities sector which continues to rise every month despite the recessionary trends and ban on Futures in some commodities.

The US Government must have spent close to $600 bn for financing its Global War on Terrorism. Since the September 2001 terrorist attacks, Congress has provided about $542.9 billion, as of May 2007, to the Department of Defense (DOD) for the Global War on Terrorism (GWOT), a GAO note observed.

U. S. energy needs rest heavily on ship-based imports. Tankers bring 55 percent of the nation's crude oil supply, as well as liquefied gases and refined products like jet fuel. This supply chain is potentially vulnerable in many places here and abroad, as borne out by several successful overseas attacks on ships and facilities. If Somali pirates can hijack with such ease, terror groups are much better equipped.

Many leading global organizations have come forward with binding instruments and recommendations to combat financing of terrorism, however, they fall short of providing any practical assistance to professional banks according to Mark Pieth editor of the book, Financing Terrorism.

Source: Commodity Online

India renews efforts to clamp down on terror funding

Indian Banks’ Association (IBA) has renewed efforts to tackle the menace of terrorism finance in India.

Though there are no figures available so far on how many transactions have been made through the country’s banks, IBA has taken it up seriously. IBA held an interaction with a high-level delegation from the US on September 11 to know how the country was tackling the issue. IBA is already working on Credit Information Bureau of India Ltd (CIBIL)’s pilot data sharing project.

IBA’s interaction was held with Patrick O’ Brien, who is the assistant secretary, office of terrorism and financial intelligence (TFI), US treasury department. Experts feel it was post ‘9/11’ that interest rates on home loans were slashed by banks in the US resulting in a phenomenal increase in the loanbook. This resulted in the present financial turmoil in the country.During a presentation, Brien had depicted the international approaches to combat illicit finance. The idea was to exchange information and gain a better understanding of the implementation of India’s framework for anti-money laundering and counter-financing of terrorism (AML/CFT).

Some of the Indian bankers, who interacted with the US delegation, told FE that bankers in the US were impressed with the banking system in India. IBA CEO K Ramakrishnan said that the American banking community was impressed after knowing that we in India have a well-regulated and strong banking sector. Still, the need was felt on ways to take our banking system to the next level. This would help avoid any terrorist group do any transaction through our banking system.

Terrorists need money to execute the sabotage activities. But their efforts can be thwarted through measures like know your customers and by strengthening the reporting system, feel experts. “More than terrorist finance, we also discussed how to strengthen ourselves on the security and compliance front,” said MV Nair, CMD, Union Bank of India, who was also present during the interaction. “We also discussed the coordinated approaches being made by the regulatory authorities in our countries, added Nair.

Source: Indian Express Newspapers

Switzerland closes money laundering probe against Bhutto

Swiss authorities on Monday closed a long-running probe into alleged money laundering against Benazir Bhutto, the former Pakistani prime minister who was assassinated in December and her husband, Swiss news agency ATS reported.

Bhutto and her husband, businessman Asif Ali Zardari, were suspected of using Swiss bank accounts to launder about 12 million dollars (8.4 million euros) in alleged bribes paid by companies seeking customs inspection contracts in Pakistan in the 1990s.

The couple were formally sentenced by decree on the charges in Geneva in 2003 after a first investigation, but the ruling was overturned on appeal.

Source: The Times of India