Financial Crime World

Financial Crime Waves in India: A Growing Concern

India, the world’s sixth-largest economy, is facing an increasing trend in financial crimes that pose significant challenges to businesses and the government. This article explores various financial crimes that have been prevalent in India and the efforts being made to combat them.

Pervasive Issues: Corporate Fraud, Bribery, and Corruption

  • The Reserve Bank of India (RBI) reported over 1,100 corporate fraud cases in 2019.
  • India’s largest loan scam, worth over $2 billion, was uncovered in 2018.

Insider Trading

  • The Securities and Exchange Board of India (SEBI) imposed penalties totaling over $11 million on 14 entities and individuals for insider trading in 2018.

Money Laundering and Terrorist Financing

  • India’s financial intelligence unit (FIU) received a total of 1.6 million Suspicious Transaction Reports (STRs) between 2013 and 2018, with over $2.5 billion identified in potential proceeds of crime.

Financial Record Keeping

  • The Goods and Services Tax (GST) regime introduced in 2017 aimed to address the issue of poor record-keeping by mandating digital record-keeping and real-time tax reporting.
  • Concerns persist about the implementation of this system, with many businesses struggling to adapt.

Due Diligence

  • Thorough background checks and verification of identities of potential business partners are essential to prevent financial crimes.

Corporate Liability, Immunity, and Leniency

  • The Companies Act, 2013, introduced provisions for stricter action against erring companies and their directors.
  • Lack of clarity regarding immunity for self-reporting and leniency for cooperating in investigations is a deterrent for many businesses.

Whistleblowing

  • The Whistleblowers Protection Act, 2011, aimed to provide a safe and secure environment for individuals to report unethical practices and corrupt activities.
  • Concerns about the lack of transparency and inadequate protection for whistleblowers persist.

Conclusion

  1. Financial crimes remain a significant concern for India’s business landscape.
  2. The government and regulatory bodies must continue to strengthen their efforts to combat these issues.
  3. Implementing measures to improve record-keeping, promote due diligence, and encourage a culture of transparency and accountability are crucial.

Disclaimer

The information in this article is for educational purposes only and should not be considered as legal advice. Contact a qualified legal professional for advice specific to your situation.