50 And Has Received Notices Over Bank Transfer

News from Mumbai where, all suspicious oversea remittances by NRIs (nonresident Indians) and irregular fund moments within their bank account are put under scanner.

In the past 3 months, more than 50 NRIs have been known to have received Notice from the enforcement directorate, having them to explain the source of money. The whole point was to understand the origin or the point of remittance and having them to appear in person sometimes before a directorate official.

They have been many such cases who were served notices upon which, they had to start settling abroad for years. Over a long time they have not only invested in properties but also have got fixed deposit, stocks and various other assets here. These NRI either redeem these investments or sell off them from time to time and transfer the money into their abroad bank accounts.

Not all of the money movements have been kosher, but, as per the people who are familiar with the ongoing fund tracking exercise in the country. An ED official told ET “There are cases where source of earning is unknown, more than permissible amount has been remitted, and money has gone into trading of land, while round tripping is suspected in some transactions.”

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Few suspects have been called for questioning. The person said that they have been pursuing the alert received from FIU. The financial intelligence unit of the government disseminates and processes information gathered from the transaction report called as – “Suspicious Transaction Report”. These are the reports those are submitted by the banks and Financial Institutions.

NRIs use more than three to four different banks and have their accounts in them to manage funds in India. The non-resident ordinary (NRO) savings account is a Rupee account which is used to hold earnings like stock gains, interests, and dividend and property sale proceeds. A maximum of $ 1 million could be remitted overseas from search accounts in a financial year once the account holder submit a self-declaration form duly signed by self and a certificate from the chartered accountant.

There are salaries, gains from stock options and many such other funds from abroad that flow into the non-resident external (NRE) rupee account. This money can be easily and freely repatriated which is lying in the NRE account unlike that of NRO. “Some of the persons who moved money from NRO account to NRE account and subsequently transferred outside India have been called for questioning. Some NRIs have received substantial amount as gifts in there and NRO accounts. Please inflows have been red flagged because the maximum a resident can transfer to a non-resident is $250,000 a year,” as mentioned by a senior chartered accountant.

It can be considered an act of violation if money is moving into the NRO account is on the back of fraudulent property or security documents, or the NRE account have been used to get back the money that was sent abroad via hawala. “An accountant will certify whether tax has been paid on such funds. He cannot check the genuineness of inflow or outflow. That depends on bank,” was told by a tax practitioner who is advising 15 NRIs who have received notices.

Being Indian passport holders, the notices cannot be ignored by any of the individuals what has been issued under the Prevention of Money Laundering Act.