Is terrorism slipping inside Indian stock market? The Financial Intelligence Unit (FIU) has issued the first annual report of the financial transaction and reportedly identified several accounts where it found a common beneficiary in many transactions. The beneficiary received huge and unexplained money transfer in his name in several transactions.
The FIU has also send a list of doubtful transactions to the Intelligence Bureau and other investigative agencies. The FIU has give details about the hundreds of cases of suspected terror financing and doubtful foreign remittances in the Indian financial market.
The FIU is responsible to keep an eye on money laundering in financial market to combat terror financing in the country. According to the FIU report, several foreign remittances were doubtful because of the negligible information regarding the source of funds and the detail of the actual beneficiaries. The FIU even found the name of some beneficiaries on the Interpol’s watch list. They were known criminals in the list.
The basis of the suspicion was that in the transaction cash deposited in bank accounts at multiple locations, off-market transactions in demat accounts but cash went to common names. The FIU also found the fake use of ATM and credit cards also.
According to the report, Banks had reported the highest number (437) of suspicious transactions in 2006. At the same time, the financial institutions and intermediaries accounted had reported about 380 suspicious transactions up to March 2007.
This is being said in media reports that this is nothing but the failure of all the regulations imposed by the government on banks and financial institutions a few years ago to restrict terrorists from laundering money in India through formal channels of transaction.
The National Security adviser had also expressed concerns on the reports of terror outfits gaining access to stock and commodity markets in India. Now, after the FIU’s report came into light, it has become clear that the money launderers and terrorists have discovered some device to go under shield of due diligence mechanism.
He had said:
Isolated instances of terrorist outfits manipulating the stock exchanges have been reported… stock exchanges in Mumbai and Chennai have, on occasion, reported that fictitious or notional companies were engaging in stock market operations.
Later, Finance Minister P Chidambaram had said in Lok Sabha in written reply:
The information available to government does not indicate any surreptitious entry into the stock market or real estate market by terrorist outfits.
Earlier, the government of India had barred some multinational banks from expanding in India and opening new branches in the country after the IPO scam but these measures had only a short-lived effect in the market it seems.