New Delhi: The Special Investigation Team (SIT) formed under an order of the Supreme Court to investigate India’s black money has, in its various reports, observed that trade-based money laundering is a major source through which illicit money is taken out of the country.
In the second report, SIT had recommended that there should be an institutional mechanism through a dedicated set up which examines mismatch between export/import data with corresponding import/export data of other countries on a regular basis.
The SIT has also recommended that, wherever possible, especially in the case of commodities, a system for cross-checking of prices of imports and exports with international prices may be done. Various reports including those by Global Financial Integrity have emphasized that trade-based money laundering is the main medium or process through which funds are illegally taken out of countries.
The Global Financial Integrity, in its report, “Illicit Financial Flows from Developing Countries 2004–2013” estimated that illicit financial flows out of India for the period 2004–2013 to be the tune of $505 billion. The SIT obtained detailed calculations of country–wise illicit financial flows for each of these years from Global Financial Integrity. Thereafter, the details were sent to Directorate of Revenue Intelligence (DRI) on 8 February and DRI was asked to verify the extent to which the calculations are correct.
The SIT has also observed that, since reports like those of Global Financial Integrity that calculate illicit financial flows from various countries are widely used in academic circles and inform the debate on this issue, it is very crucial to ascertain the veracity of such reports. Further necessary action shall be taken by the SIT after receipt of the report from DRI.