India Investigates 20 Export Houses for Alleged Illicit Trade with Pakistan via UAE
India’s Financial Intelligence Unit (FIU) has launched an investigation into approximately 20 export houses suspected of engaging in trade-based money laundering with Pakistan through the UAE corridor. The probe focuses on transactions over the past 14 months, with particular emphasis on cash in advance (CIA) payments and overseas agent commissions that may be used to conceal illicit financial flows.
Alleged Use of Dummy Businesses for Money Laundering
According to a senior official, the investigation targets trade-based money laundering between India and Pakistan, where the use of dummy business operations is suspected to facilitate the movement of funds. The authorities have been alerted to potential terrorism-related connections in these cases.
Unusual Pricing and Multiple Accounts Used to Hide Funds
The investigation has identified suspiciously inflated product prices and the use of multiple accounts to obscure the origin of funds. For instance, an ordinary electrical conductor component, typically valued at ₹100 per unit, was imported at an unusually high price range of ₹8,000-19,000 per unit. Similarly, basic costume jewellery, with a standard market value between ₹100-150, was sent to UAE and subsequently to Pakistan at an inflated price of ₹30,000 per piece.
Examples of Illicit Trade Activities
- Low-quality jewellery, semi-precious stones, cosmetics, fragrances, dry fruits, and electrical equipment are among the items under scrutiny.
- Some transactions involved payments to agents in the UAE that exceeded the total cost of the consignment, raising concerns about the legitimacy of the trade.
- Authorities have noted that the use of multiple accounts and inflated prices is a common tactic to disguise the true nature of the transactions.
Global Trends in Trade-Based Money Laundering
Cross-border cash transactions face increasing challenges due to stringent customs procedures and the rise of the digital economy, prompting criminals to develop new methods to launder money. Officials from around the world maintain a watchful eye on trade-based money laundering activities, with India’s FIU leading the investigation into these suspected illicit operations.
Previous Cases of Illicit Trade Involving Synthetic Diamonds
Earlier this year, the Directorate of Revenue Intelligence (DRI) collaborated with Hong Kong authorities to uncover a scheme involving synthetic diamonds. These diamonds were imported into India at values inflated by over 100 times, enabling illegal foreign currency transfers from India. Further investigations revealed that the importing entity was also involved in exporting diamond-studded jewellery to Hong Kong and other countries at significantly inflated values.
India’s Stance on Counter-Money Laundering Measures
India’s Financial Intelligence Unit is taking a firm stance against money laundering activities, particularly those that involve cross-border trade with Pakistan. The investigation underscores the country’s commitment to maintaining financial integrity and preventing the flow of illicit funds through legitimate trade channels.