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India
26 Dec 2016

Banks accused of helping bullion traders

The Enforcement Directorate (ED) has accused officials of four private banks of assisting a bullion trader to dispose of demonetized currency.

The Zaveri-bazaar based bullion trader in question deposited Rs.150 crore across accounts in four banks.

The ED suspects involvement of bank officials as deposits were accepted unquestioningly and in several cases, deposit receipts were issued to depositor even without counting notes.

In context

Enforcement directorate cracks down on banks
Crores of demonetized currency diverted

How

Crores of demonetized currency diverted

Immediately after demonetization, cash worth Rs.150 crore was deposited in several shell companies (existing only on paper).

The cash was then wire transferred to the bullion trader's account via RTGS in order to create an evident transaction trail.

The bullion trader alleged that the payments were received for gold sales from clients.

However when questioned the trader was unable to reveal details of customers.

Bank accounts frozen

Although the bullion trader's accounts under investigation have been frozen, most of the money has already been diverted to other accounts. Many other bullion traders are expected to soon come under ED's scanner.

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Key findings

ED's Investigation

Upon investigation, the ED discovered that people associated with the shell-companies were fake.

These companies had not conducted any business except for transferring payments to the bullion trader's account in installments.

ED officials suspect the trader's business was to assist people with converting large sums of unaccounted money into gold for a commission and then depositing the money with the help of hawala operators.

Modus operandi

The ED had tracked down a near identical case little over a week ago in Kalbadevi; shell accounts holding nearly Rs.70 crore were unearthed: the source of the money was traced back to payments made to another bullion trader.

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