Income Tax Department raids Chinese firms for money laundering

Income tax sleuths conducted raids on a few Chinese individuals and their Indian associates on Tuesday based on information of their likely involvement in money laundering through a series of shell entities. The raids were conducted at various premises of these Chinese entities, their close confederates and a couple of bank employees, according to an IT department statement. Reported by Krishnanand Tripathi.

New Delhi: In a strong signal of the Modi government’s intent to crack down on illegal activities by Chinese firms operating in the country, the Income Tax Department Tuesday said that it carried out raids on some Chinese entities and their Indian associates who were involved in money laundering, Hawala transactions through a series of shell entities.

“Based on the credible information that few Chinese individuals and their Indian associates were involved in money laundering and hawala transactions through series of shell entities, a search action was mounted at various premises of these Chinese entities, their close confederates and couple of bank employees,” said the Central Board of Direct Taxes (CBDT).

The CBDT said its search action revealed that more than 40 bank accounts were created in various dummy entities at the behest of Chinese individuals. These accounts were used in creating credit entries of more than Rs. 1,000 crores over a period of time.

Further investigations revealed that a bogus advance of Rs 100 crore was also taken by a subsidiary of a Chinese company and its associates for opening retail showrooms in the country.

“Incriminating documents in respect of hawala transactions and laundering of money with the active involvement of bank employees and Chartered accountants has been found as a result of search action,” said the Board that is the apex body for the administration of direct taxes in the country.

In this case, authorities also found evidence of foreign Hawala transactions involving Hong Kong and US dollars.

Prime Minister Narendra Modi’s government has taken several actions against Chinese companies and investors following a violent face-off between Indian and Chinese soldiers in Galwan Valley in Ladakh in June this year in which 20 Indian soldiers and unconfirmed numbers of PLA soldiers were killed.

The Centre not only banned over 100 Chinese Mobile Apps including Tiktok, Shareit, Helo and others last month, it also barred Chinese companies in participating in public procurement, particularly in sensitive sectors like Telecom.

However, this is perhaps the first instance, when Chinese entities have been found involved in money laundering and Hawala transactions, which is usually associated with underworld dons based in Gulf countries and Pakistan.