Indian banks received highest fake currency post demonetization: Report
(Sourced from PTI)
The country's banks received an all-time high amount of fake currency and also detected an over 480 percent jump in suspicious transactions post demonetization, the first-ever report on dubious deposits made in the wake of the 2016 notes ban has revealed. The banks, including those in the private, public and cooperative sectors, and other financial institutions collectively generated 400 percent more suspicious transaction reports.
The Financial Intelligence Unit that analyzes suspicious financial transactions pertaining to money laundering and terror financing as part of the Union Finance Ministry establishment, reported that counterfeit currency transactions in banking and other economic channels witnessed an increase by over 3.22 lakh instances during 2016-17.
The report said that counterfeit currency transactions had a link to demonetization of two high-value currencies of Rs. 1,000 and Rs. 500 which was declared by PM Modi on November 2016. "A noteworthy growth was also seen in counterfeit currency reports (CCRs) which increased from 4.10 lakh in 2015-16 to over 7.33 lakh in 2016-17, which may also be attributed to demonetization," it said.
CCRs are "transaction based reports" and they are generated only when a fake Indian currency note (FICN) is detected. The latest figure is the highest ever since the CCRs were first generated in the year 2008-09.
As per FIU's anti-money laundering rules, the banks and other financial bodies are required to report all cash transactions where forged or counterfeit currency notes or bank notes have been used as genuine or where any forgery of a valuable security or a document has taken place. The report did not specify the value of such fake currencies detected.
The suspicious transaction reports (STRs), that are generated when a transaction either indicates that it has been made in circumstances of unusual or unjustified complexity or appears to have no economic rationale or bona fide purpose, also saw a record high rate of detection during the same period and an over 400 percent jump from the comparative period just before demonetization.
"The number of STRs received in 2016-17 is 4,73,006 which is more than four times as compared to 2015-16 and this increase is attributed to demonetization exercise...," the report said.
During 2015-16, while a total of 1.05 lakh STRs were generated out of which 61,361 were sent by banks, it jumped to 3,61,215 post demonetization and 40,033 such reports were sent was by financial intermediaries that shot up to 94,837 post demonetization, the report said. All banks and financial institutions are required to generate STRs and send it to the FIU under the PMLA.
In the wake of these high numbers of reports CCRs and STRs coming in, the FIU ramped up its efforts in 2016-17 and disseminated 56,000 STRs to various investigative agencies like the Income Tax Department, the Enforcement Directorate (ED), the CBI and the Directorate of Revenue Intelligence among others as compared to 53,000 sent in the previous year.