ED searches money changers’ premises over alleged FEMA violations
The Enforcement Directorate has searched multiple locations in Delhi and Uttarakhand’s Rishikesh and Dehradun as part of an inquiry into alleged violations of the Foreign
The Enforcement Directorate has searched multiple locations in Delhi and Uttarakhand’s Rishikesh and Dehradun as part of an inquiry into alleged violations of the Foreign Exchange Management Act (FEMA) and the Reserve Bank of India (RBI) Master Directions governing money changing activities. The ED developed intelligence that certain licensed full-fledged money changers, their franchisees, and associated entities were engaged in unauthorised foreign exchange transactions. The agency alleges that they were also into “hawala” transactions. “It was alleged that foreign currency was being exchanged outside the licensed framework without adherence to mandatory Know Your Customer (KYC) requirements, prescribed documentation, and invoicing procedures,” said the agency.
The searches were carried out at the premises of Ganga Forex Private Limited, JPJN Financial Services Private Limited, Alpine Forex Private Limited, Jai Jeen Forex Private Limited, associated business entities named JPJN Gems Unit, and Vintage India, apart from residential premises of key persons managing the entities in question. During the operation, the agency seized substantial quantities of foreign currency from multiple jurisdictions, equivalent to about ₹54.58 lakh, ₹33.98 lakh of unaccounted Indian currency, documents and digital devices. “The evidence collected has brought to light a nexus of entities and individuals, facilitating international ‘hawala’ transactions through a network of domestic associates and overseas contacts...
discrepancies in foreign currency physical stock were also noticed vis-à-vis the recorded balances,” it said. The agency alleged that the “discrepancies” prima facie indicated that the books of account and stock registers were not being maintained in accordance with the actual foreign exchange transactions undertaken by the entities. “The existence of unaccounted cash and foreign currency suggests that unauthorised foreign exchange transactions may have been carried out outside the regular books of account in violation of the prescribed regulatory framework,” said the ED. The ED did not find any purchase registers, customer-wise records, KYC documents, encashment certificates or other records related to the purchase of foreign currency on the business premises of franchisees.
“As per the RBI Master Direction on Money Changing Activities, a franchisee is permitted to purchase foreign currency only on behalf of its franchiser and is required to maintain records of such transactions,” it said, adding that investigations were under way to identify the complete financial trail.
The BriefWire