Illegal foreign holdings under ED scanner for FEMA violations
On January 17, the ED conducted searches at premises linked to former chief engineer of the Brihanmumbai Municipal Corporation (BMC) and recovered incriminating documents of a property based in Dubai. The agency has not disclosed the name of the former BMC officer as investigations are underway.
In a bid to tackle black money stashed abroad, the Enforcement Directorate (ED) has begun proceedings to identify illegal foreign holdings of wealthy people.
ED sources stated that they have identified illegal foreign holdings amounting to contravention of Section 4 of the Foreign Exchange Management Act, 1999 (FEMA).
The ED is empowered to seize equivalent assets in India under Section 37-A of FEMA.
“There are substantial people who have been holding illegal properties abroad,” said a source privy to the development. “Till now, such properties were purchased brazenly.” The agency will initiate action against such illegal properties in the near future, the source added.
On January 17, the ED conducted searches at premises linked to former chief engineer of the Brihanmumbai Municipal Corporation (BMC) and recovered incriminating documents of a property based in Dubai. The agency has not disclosed the name of the former BMC officer as investigations are underway.
“It has been stated by the former chief engineer of BMC, that he purchased the property in Dubai at Park Island, Bonaire Marsa, admeasuring 89 square metres for ₹70 lakh in 2012,” a statement by the agency read. “The property is held jointly in the name of the person, his spouse and son. However, no documents confirming the value of the property could be furnished by him. He also could not explain the source of the fund and mode of payment for the purchase.”
Calling this a “test case”, the source added, “Earlier there was limited data exchange with foreign countries but now we do have a foothold.” Sources stated that such foreign holdings are hidden with complex multi layered structures. “Usually, such holdings are done under the name of the company,” said the source. The agency has powers to conduct searches under the provisions of FEMA.
Investigating agencies have been scanning undisclosed foreign assets as part of their measure to check black money. The Income Tax (IT) conducted searches on January 19, 2020, on a group which has been on their radar for having substantial undisclosed foreign assets. The operation covered 13 premises in the National Capital Region (NCR) and as per an IT statement, “searches led to detection of undisclosed foreign assets of more than ₹1000 crore.”
