New Delhi: For the next month, Income Tax and economic intelligence sleuths will hit the streets looking for real beneficiaries of around 771 accounts that they fear were hired from small depositors on monthly rent to beat the anti-black money measures. Besides, top finance ministry sources also confirmed that Rs 21,000 crore was deposited in Jan Dhan accounts in West Bengal and Karnataka, which they suspect could be hired to park tainted money after the government decided to demonetise high value currency notes on 8 November.
Zero balance Jan Dhan accounts are meant for weaker sections and low-income groups to bring about comprehensive financial inclusion of all the households in the country.
Top sources said Cash Transaction Reports (CTRs) and Suspicious Transaction Reports (STRs) have thrown up sudden activities in 298 bank accounts from Uttar Pradesh, 137 from West Bengal and 121 from Bihar, besides some allegedly ‘rented accounts’ in at least 11 more states. And this brewing illicit activity to dodge demonetisation policy is just the tip of 'rent an account' scam. It is a far-reaching, organised scam, confided a senior official privy to the ongoing investigation, suspecting a deep conspiracy being hatched by a well-oiled network to pile huge unaccounted wealth in zero balance accounts and make it legitimate.
The transactions, officials said, are in fact shocking and as per the details provided by the reporting entities — banks — definitely warrant additional scrutiny.
Since the announcement of the demonetisation policy a fortnight ago, the government has directed all public and private banks to detect and report potentially illegal and suspicious transactions that may flow through zero balance and Jan Dhan accounts that officials believe are the most favoured tools for black money hoarders to deposit large amounts of cash. A government source confirmed to Firstpost that the government has launched a manual transaction monitoring system, targeting specific types of transactions, conducted across the 371 District Central Cooperative Banks (DCCBs) and a letter was shot off on 15 November after reports emerged that some cooperative banks accepted large amounts of cash on 8 November — the day Prime Minister Narendra Modi announced the game-changer move at 8 pm.
“We have asked for the two reports. One is specifically about deposits till midnight on 8 November and the second report is on cash deposited between 10 and 14 November. All the cooperative banks have been told to file a daily report on cash deposits from 15 November. The direction very clear states that farmers and genuine customers in rural areas are not to be harassed. The investigation will take up the cases only linked to hiring and misuse of someone’s account by black money hoarders,” he said, further adding that similar instructions have been issued to regional rural banks and state cooperative banks.
However, the government direction also points out that the whole exercise should not bring discomfiture to the farmers preparing for Rabi crop season.
The Income Tax directive on 'hiring bank accounts' to convert black money into white makes it harshly clear that both — the account holder and tenant — will be punished as per the new law introduced in the Prohibition of Benami Property Transaction Act, 1988. “The benamidar, beneficial owner and any other person who abets or induces the benami transactions shall be punishable with rigorous imprisonment from one year to seven years and shall be liable to fine.”
Rent an account: The Pakistani model of money-laundering
For seasoned spies in the Research and Analysis Wing (RAW) and the Intelligence Bureau (IB), the hiring of a bank account after demonetisation is a grim reminder of the ‘Pakistani model of money-laundering’. A recent secret communication reviewed by Firstpost shows that a Pakistani named Akram was involved in creating and running an India based elaborate network that was involved in hiring bank accounts from poor account holders to carry out money-laundering activities. Sources said the black money hoarders are perhaps using the similar pattern to give tax sleuths a slip, layering the money through bank accounts that hardly witness major financial transactions to slip under the radar of Central agencies.
The secret note gives out details of at least three cases unearthed by the agencies including one in July 2014 when Ranjit Kumar, a native of Rikhiya Village in Deoghar, Jharkhand was arrested for renting bank accounts from poor families in lieu of attractive returns. Similarly, in June 2014, three persons — Brajesh, Dharmedra Kumar Prajapati and Rajiv Patel — were picked up from Bhopal and at least 37 bank account details with ATM cards were seized from them. The biggest breakthrough to decode the ‘Pakistani model’ of hiring bank accounts was busted in Roorkee in February 2013, when Jai Prakash, a native of Shamli in Muzaffarnagar was caught with 132 bank account passbooks and ATM cards of various banks.
A majority of state-owned banks were targeted by the network that used to hire bank accounts and their ATM cards on rent from different individuals and subsequently provided the details to their Pakistani associates for laundering. But, since high-value currency has been reduced to scraps of paper by the government, the money being deposited by the black money hoarders in rented accounts, cannot escape the close scrutiny of bank and tax officials.
“We have already interrogated certain individuals, who allegedly allowed the use of their bank accounts by suspected black money hoarders. The notices under relevant sections have been issued for further probe,” senior government officials quoted above said.