Millions of INR lost to money laundering

ACC: The Royal Monetary Authority’s (RMA) measures to curb the outflow of INR (Indian Rupee) since 2011 has resulted in both Bhutanese and non-Bhutanese resorting to avail INR by faking imports of zero tax commodities, manipulation of imports, illegal transaction of currency and using ATM cards.

The Anti-Corruption Commission (ACC), which has launched an investigation since April 20 into the complex issues of money laundering, uncovered millions of INR repatriated through such fraudulent practices over the past three years.

In a recent case, the commission uncovered a racket of Automated Teller Machine (ATM) cards being used to divert more than INR 2.86 million (M) monthly from Bhutan since 2013.

Police in Phuentsholing arrested Sanjeev Kumar Gupta, 32, from across the border, in connection to possession of numerous Bhutanese ATM cards, on August 20 and handed over to ACC for investigation.

The suspect was apprehended with a list of 286 Bhutanese names with their ATM card details involved in aiding him. Sources said he does not know many of them.

Sanjeev Kumar Gupta in his statement to the commission reportedly admitted to using the ATM cards to withdraw INR from Jaigaon. He then sold the INR at 7.5 to eight percent above the exchange rate and pays Nu 500 to each ATM cardholder as commission. It was reported that his monthly transaction amounted to INR 2.86M with a monthly income of INR 0.3M.  Of the total income, the suspect is believed to have retained INR 100,000 and paid INR 200,000 to the account holders.

The modus operandi was that the Bhutanese Currency (BC) traded in Jaigaon would get deposited into these accounts. The money would then be cashed out in Rupee through ATM machines across the border.

The suspect also reportedly told the commission that there are many who were engaged in similar practices.

The commission also reportedly found that some non-Bhutanese in connivance with Bhutanese clearing agents have forged and tampered Bhutanese customs documents and repatriated millions of INR by ways of real time gross settlement (RTGS), demand draft (DD) and telegraph transfer (TT).

In a single case, the repatriation amount adds to over INR 77M. An ACC official said that banks failed to exercise minimum level of due diligence as they are mandated to do so.

The commission, which is also looking into the fraudulent import and deflection of goods, fronting, under invoicing and wrongful declaration of goods, tax evasion and producing fake import bills, found several individuals, who possessed as many as 23 business licenses.

Many civil servants especially posted in Phuentsholing obtained licenses in their relatives’ names. Such licenses were obtained through forgery.

While looking into the deflection of third country import and deflection of zero tax items, the commission has reportedly found that more than INR 1.4 billion (B) were repatriated through potential fake imports of zero tax food items and construction materials over the past three years.

Last year, the commission also found that INR 70.056M were repatriated between May 2012 and January 2014 using 20 bank accounts, which were in the name of several Bhutanese individuals and business entities.

One of the RMA’s regulations require Bhutanese importers to make payment to Indian parties through banking channel only. This can be done only on production of customs document as evidence that goods have come to Bhutan.

Importers are required to produce customs documents to the bank, which would then make payment directly to parties in India through DD and TT. However, this left room for businessmen and bank officials to manipulate and divert INR.

Meanwhile, three non-Bhutanese and a Bhutanese are still under detention.

Rinzin Wangchuk

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