A media agency report indicates that Standard Chartered Plc is currently facing a $2.7 billion lawsuit from liquidators who claim that the company was involved in the diversion of billions of dollars that were misappropriated from Malaysian sovereign wealth fund 1MDB.
The lawsuit, which was filed in Singapore on 30 June, is the most recent effort to recoup funds that were seized from 1MDB as part of a ten-year investigation that has involved several of the biggest institutions in the world.
According to a statement issued on July 1, liquidators filed a lawsuit against the Singapore-based bank with its headquarters in the United Kingdom. According to the bank’s statement provided to a media house, the claim documents have not yet been received.
It added that the liquidators had openly declared the 1MDB businesses to be “shell companies with no legitimate business” and that it “emphatically rejects any claims” made by them.
Standard Chartered Rejecting the Claims
However, the Standard Chartered stated that the bank will strongly defend any litigation brought by the liquidators and that any claims made by these firms are without merit. StanChart went on to say that it had invested much in its anti-money laundering procedures and processes.
According to the bank, Standard Chartered closed these accounts in 2013, disclosed the 1MDB entities’ transaction activities, and provided the investigating authorities with full cooperation.
According to the claims, Standard Chartered Bank allowed over 100 intrabank transfers between 2009 and 2013, which aided in hiding the movement of money that had been stolen. The liquidators’ statement stated that these transactions resulted in the claimants losing almost $2.7 billion and the government losing S$20 million ($15.7 million).
1MDB Scandal
With an estimated $4 billion in stolen funds, the 1MDB scam was one of the worst financial scandals in history. Najib Razak, the prime minister of Malaysia at the time, was also prosecuted as a result of the scam.
He was found guilty and given a six-year prison term. Several of the largest banks in the US, Europe, and Asia were also engaged. The disgraced former Goldman Sachs banker at the centre of the scandal, Tim Leissner, was given a two-year prison sentence by a federal court in Brooklyn last month.
According to a media report, liquidators at the financial services company Kroll, which is in charge of organising the 1MDB recovery efforts, have discovered that over $2.7 billion passed through StanChart accounts, including payments to Najib and purchases of jewellery and upscale goods for his family.
In 2016, Standard Chartered was fined S$5.2 million by Singaporean authorities for anti-money laundering violations associated with the case. Fines were also imposed on other banks.
On February 17, the Enforcement Directorate (ED) temporarily seized INR 10.63 crore in real estate in accordance with the Prevention of Money Laundering Act (PMLA), 2002. The late Amit Bhardwaj is the owner of these assets. According to the agency’s statement on 19 February, the attached properties include commercial buildings situated in Dubai, the United Arab Emirates’ premier business districts.
Following several FIRs against M/s Variable Tech Pte Ltd and a number of people, including the late Amit Bhardwaj, his family members Ajay, Vivek, Simpy, and Mahender Bhardwaj, as well as several MLM agents, the ED launched its investigation. The defendants allegedly promised a 10% monthly return in Bitcoin to gullible members of the public in exchange for significant sums of money in the form of Bitcoins. Investors were promised enormous returns in cryptocurrency assets, and the gathered Bitcoins were allegedly to be used for Bitcoin mining. The promoters, however, defrauded the investors and hid the illicitly obtained Bitcoins in hidden web wallets.
Multiple Search Operations by ED
The ED already carried out several search operations in connection with this investigation. Three people have been taken into custody: Nikhil Mahajan (arrested on January 16, 2023), Nitin Gaur (arrested on December 29, 2023), and Simpy Bhardwaj (arrested on December 17, 2023). In the same case, businessman Raj Kundra and his wife, actress Shilpa Shetty, had immovable and moveable properties valued at INR 97.79 crore seized by the ED. A bungalow in Pune, equity shares owned by Raj Kundra, and a residential unit in Juhu, Mumbai, registered in Shilpa Shetty’s name are among the attached assets. The famous couple contested these notices in the Bombay High Court, claiming that the ED had overreached itself and infringed upon their legal rights. The ED was ordered by the court to wait to issue the eviction notices until the couple appealed to the appellate body.
ED’s Claims
According to the ED, investors were expected to receive substantial returns on their cryptocurrency investments, and the gathered cryptocurrency was to be used for Bitcoin mining.However, according to the agency, the promoters defrauded the investors and were hiding the illicitly obtained Bitcoins in “obscure” online wallets. The ED has already arrested Simpy Bhardwaj, Nitin Gaur, and Nikhil Mahajan. The primary suspects, Ajay and Mahendra Bhardwaj, are still evading capture, according to the federal investigation agency. Since money obtained from the proceeds of crime has travelled outside, the ED has looked to other nations for assistance.
Amit and Vivek Bhardwaj founded Variable Tech in Singapore in 2014, launching BitEx, a cryptocurrency exchange that offers Bitcoin mining contracts, according to the chargesheet filed by the Pune Police. A 10% monthly return on each investment for 18 months was promised under these contracts, and Bitcoin would be used for payout. The company’s scam resulted in the loss of 8,000 investors’ funds. On January 15, 2022, Amit Bhardwaj passed away from cardiac arrest.
The Ministry of Home Affairs (MHA)’s Indian Cybercrime Coordination Centre (I4C) has taken a strong stance against cybercrime by warning about illicit payment gateways set up by transnational organised cybercriminals. Money laundering as a service is allegedly being facilitated by these gateways, which were made utilising mule bank accounts.
These actions indicate a number of payment gateways, including RPPay, PoccoPay, RTX Pay, and PeacePay. According to reports, these platforms are run by foreigners and are a component of a bigger network that provides services for money laundering.
Frequent Raids Are Being Conducted Nationwide
The Ministry of Home Affairs announced in a news release that a network of illicit digital payment gateways connected to numerous cybercrimes was discovered during nationwide operations by the Gujarat and Andhra Pradesh Police.
The Ministry claims that these operations, which were mostly discovered via social media sites like Facebook and Telegram, took use of rented bank accounts from people and shell corporations. Social media platforms are used to research current and savings accounts. According to government officials, these accounts are owned by shell corporations, businesses, or private citizens.
What I4C’s Investigations Further Revealed?
These mule accounts are frequently remotely managed from overseas, according to the I4C’s investigation. Once set up, these gateways made it possible for criminal syndicates to handle deposits for illegal operations such as offshore betting, phoney stock trading platforms, and fraudulent investment schemes.
Because dealing in illegal funds might result in severe legal consequences, including arrest, the I4C advised citizens against selling or renting their bank accounts or any company registration documents. According to I4C, banks may utilise checks to find instances of bank account misuse that result in the establishment of illicit payment gateways.
Who is Indian Cybercrime Coordination Centre?
Cyberspace transcends national borders and manages Coordination between many stakeholders in various jurisdictions at all levels is necessary to combat cybercrime. One of the types of transnational crime that is expanding the fastest is cybercrime. There has been an exponential rise in cybercrime worldwide due to the surge in internet usage and rapidly evolving technologies.
In order to put a firm scanner on the cyber activities, the Ministry of Home Affairs, Government of India, launched the Indian Cybercrime Coordination Centre (I4C). This move was initiated to address cybercrime throughout the nation in a comprehensive and coordinated way.
I4C aims to address every aspect of cybercrime for the benefit of the public, including enhancing cooperation between different law enforcement organisations and interested parties, promoting improvements in India’s overall capacity to combat cybercrime, and raising citizen satisfaction levels.
On October 5, 2018, the Indian Cybercrime Coordination Centre plan was authorised. Since its inception, it has sought to improve the country’s overall capacity to combat cybercrimes and foster efficient cooperation between law enforcement agencies. The Home Minister dedicated the I4C to the nation on January 10, 2020.
As per a report published by a media house, India is actively advocating for the inclusion of online gaming companies within the framework of the Anti-Money Laundering (AML) and Countering the Financing of Terrorism (CFT) systems. To implement stringent KYC rules and the mandatory reporting of suspicious activity by these organizations, the government has initiated internal conversations and is currently investigating potential methods to address these issues.
It is anticipated that New Delhi will bring up this matter once more at the upcoming conference of the Financial Action Task Force (FATF) in Paris. Officials from New Delhi are expected to bring attention to the fact that online gaming platforms such as Mahadev Apps are being used for money laundering.
An official’s statement reported in the report mentioned that India will once again submit its line of reasoning regarding the necessity of these platforms being governed by global standards.
The government’s goal, according to the report, is not to hamper the expansion of the online gambling industry but rather to safeguard it against the hazards of money laundering. Gaming platforms would be required to comply with Know Your Customer (KYC) standards and report suspicious transactions, including the identification of the beneficiaries of the transactions if the FATF were to bring the industry under the AML/CFT framework.
Gambling Controversy Exposed
An unlawful betting network that was connected to the Mahadev Online Book platform was discovered by the Enforcement Directorate (ED) in the 2023. This platform featured variety of games, including online cricket and card games. Match-fixing and money laundering through bitcoin are two activities that the ED believes the platform may have been involved in.
As indicated in the report, another official voiced his concerns regarding the transfer of funds across international borders, particularly in relation to gaming applications that are based in foreign countries but cater to users in India specifically.
Tighter Gaming Regulations
Despite the fact that compliance has been limited, the government has already made it mandatory for overseas gambling enterprises to register in India. The scope of the Prevention of Money Laundering Act (PMLA) was expanded by the government in March 2023 to include certain acts that are associated with virtual digital assets.
According to the study, there were initial concerns that online gaming platforms might be required to comply with PMLA due to their participation with cryptocurrencies. However, the obligations continue to be restricted to cryptocurrency exchanges, and gaming companies are not yet taken into consideration by the law.
The U.S. government recently imposed a substantial $4 billion fine on Binance, the world’s largest cryptocurrency exchange. This penalty was a consequence of confirmed serious protocol failures, including frequent violations of U.S. sanctions. Binance’s CEO, Changpeng Zhao, a prominent figure in the crypto industry, resigned on November 22 in the wake of these developments.
Binance – Changpeng Zhao (Founder and Ex-CEO), Richard Teng (Current CEO)
The cryptocurrency market, highly sensitive to even minor disruptions, was rattled by this news, impacting thousands of traders worldwide who utilize Binance for their crypto transactions, whether legally or not.
Changpeng Zhao attributed his resignation to acknowledging “mistakes” and acting in the best interest of the company. In Seattle, he pleaded guilty to violating the Bank Secrecy Act and agreed to a $50 million fine as part of a legal arrangement. In his statement on November 22, Zhao expressed the emotional difficulty of stepping down but emphasized its necessity for the community, Binance, and himself.
Richard Teng, formerly Binance’s Global Head of Regional Markets, was appointed as the new CEO. Zhao highlighted Teng’s extensive 30-year financial services and regulatory experience in Abu Dhabi and Singapore.
Despite stepping down, Zhao will remain a Binance shareholder, retaining significant influence over the company he founded in 2017. He plans to focus on Decentralized Finance (DeFi), potentially mentoring aspiring entrepreneurs and taking a break to spend time with his family.
Binance’s Legal Woes: A Closer Look at Charges
Binance faced charges for failing to maintain an effective anti-money laundering program, operating an unlicensed money-transmitting business, and violating the International Emergency Economic Powers Act. U.S. Treasury Secretary Janet Yellen revealed that Binance did not report suspicious transactions, allowing illicit actors involved in criminal activities, including terrorism, to transact freely on the platform. The settlement agreement with the Treasury’s Financial Crimes Enforcement Network and the Office of Foreign Assets Control imposed a total penalty exceeding $4 billion, marking it as the largest enforcement action in the Treasury’s history.
Binance has encountered various legal and compliance challenges across multiple countries, navigating them under Zhao’s bold leadership. The company has often proclaimed its commitment to regulatory support while disengaging from jurisdictions attempting to regulate or investigate its operations. Nevertheless, the U.S. Treasury accused Binance of falsely claiming its exit from the U.S. years ago and maintaining connections with the country, including retaining U.S. users.
In June of this year, the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Binance, alleging the commingling and diversion of customer assets to a third party linked with Zhao. The exchange was accused of violating federal securities laws by “illegally conducting unregistered offers and sales of securities to U.S. investors.”
The impact on crypto investors and the sector is significant. While U.S.-based individuals are now prohibited from using the Binance platform, the enforcement of this policy under the next CEO remains uncertain. Binance has been instructed to entirely withdraw from the country and will be closely monitored moving forward. The native cryptocurrency of the BNB blockchain ecosystem, BNB, experienced a more than 10% decline to approximately $234 following Zhao’s resignation but began a gradual recovery.
As regulatory pressure on crypto exchanges serving U.S. customers increases, these platforms may choose to comply with the country’s registration requirements, even if only on paper, or opt for a complete exit. Some exchanges may attempt to evade legal action by establishing headquarters in foreign tax havens. For crypto investors seeking to avoid monitoring by centralized authorities or the U.S. government, the riskier DeFi route or transactions through non-regulated decentralized exchanges (DEXs) could be explored.
In a noteworthy turn of events, Zhao, in December of the previous year, publicly criticized the collapse of the FTX crypto exchange led by Sam Bankman-Fried. Zhao drew attention to the alleged “reprehensible misuse of customer funds” at FTX. However, almost a year later, he issued an apology for his own actions and stepped away from Binance, a crypto exchange facing severe condemnation from U.S. regulators for criminal practices. This serves as another example of how swiftly the illusion of stability can fracture within the volatile crypto sector.
Indian Minister’s Lesson and Government Skepticism
As Changpeng Zhao (CZ) stepped down from his role as the chief executive of Binance, the Union Minister of State for Electronics and Information Technology, Rajeev Chandrashekhar, highlighted a crucial lesson to be gleaned from the situations involving Binance, FTX, and other crypto companies.
In a statement on X, the minister emphasized that utilizing new technology to break the law does not categorize one as a disrupter; rather, it designates them as a criminal. He added that the skeptical stance of the current government towards crypto speculation has safeguarded countless Indians from potential crypto meltdowns and losses.
The legal action against Binance unfolded nearly a year after another major exchange, FTX, faced a meltdown, resulting in significant losses for crypto investors globally. Investigations by the Department of Justice and other authorities in the US and various jurisdictions had probed Binance for years over alleged malpractices and violations of local financial laws. On Tuesday, a US court charged Binance with violations of anti-money laundering and sanctions laws, imposing a hefty settlement of $4.3 billion, marking one of the largest settlements in the country.
As part of the deal, CZ will individually pay $50 million and step down as CEO after being found guilty of violating the Bank Secrecy Act in a Seattle court. Binance was additionally accused of lacking a proper anti-money laundering program, running an unlicensed money-transmitting business, and violating sanctions laws, as detailed in court filings. The minister’s tweet, coupled with India’s already cautious stance on the cryptocurrency class, hints at potential upheaval in the domestic market, according to industry insiders.
Indian Crypto Landscape: Regulatory Scrutiny and Investor Shift
Taxation on Cryptocurrency Explained
Unocoin’s co-founder and CEO, Sathvik Vishwanath, noted that CZ’s resignation and the anti-money laundering violations might heighten regulatory scrutiny of crypto activities in India, prompting authorities to reevaluate and strengthen the regulatory framework. This, in turn, could increase compliance pressure on domestic stock exchanges in India. Sumit Gupta, co-founder and CEO of CoinDCX, added that the impact on Indian investors could be significant, given that many have shifted to foreign exchanges like Binance for trading, especially following the implementation of a 30% capital gains tax and 1% tax deducted at source by the Indian government last year. A recent study by the ESYA center revealed a notable shift of 3-5 million Indians and over 90% of the traffic to offshore exchanges.
Manhar Garegrat, the Country Head for India and Global Partnerships at Liminal, a platform specializing in wallet infrastructure and custody solutions, remarked on the departure of Zhao, the CEO of Binance. According to Garegrat, this marks a crucial moment in the global crypto landscape, signifying a shift towards enhanced transparency and a commitment to regulatory compliance.
As the predominant offshore digital assets exchange, Binance has been under intense regulatory scrutiny in various jurisdictions, particularly in the United States. The decision of CZ to step down and pass the CEO baton to Richard Teng serves as a clear indication that Binance is taking these regulatory concerns seriously. The exchange is demonstrating its commitment to collaborating with regulators to establish a more compliant operational framework.
This strategic move is positive for Binance and the entire crypto industry, showcasing that even the largest and most influential players are accountable to the law. It is expected to inspire other exchanges to follow suit, contributing to the legitimization of the crypto space and paving the way for broader adoption. Furthermore, Zhao’s departure is likely to address concerns about the leadership structure within Binance. By entrusting leadership to a new figure, Binance is signaling its dedication to a balanced leadership approach, not relying solely on any individual.
Shivam Thakral, the CEO of BuyUcoin, India’s second-longest-running digital asset exchange, reported that the crypto market has rebounded following the recent regulatory actions against Binance, aligning with the overall recovery of the crypto market. In the immediate aftermath of CZ’s (Changpeng Zhao) announcement of stepping down, the digital asset market experienced a significant downturn, with the overall crypto market cap dropping below the $1.4 trillion mark. However, the market has since recouped most of its losses, spearheaded by BTC and ETH, leading to the crypto market cap swelling to $1.42 trillion.
Looking forward, the change in leadership at Binance has the potential to bring a fresh management perspective, guiding the crypto giant toward a more mature phase of growth. Nevertheless, short-term market volatility is anticipated as traders closely monitor the unfolding developments between Binance and the Department of Justice (DOJ).
Global Crypto Landscape: Maturation and Accountability
Richard Teng, the newly appointed CEO of Binance, boasts an impeccable track record in financial services and regulatory compliance. His expertise positions him well to assist Binance in addressing regulatory issues and fostering a more compliant environment within the organization.
In summary, this event holds significant weight for the global crypto landscape, signifying the industry’s maturation and a growing sense of accountability to stakeholders. This positive development is anticipated to result in increased transparency, heightened regulatory compliance, and a more widespread adoption of digital assets.
FAQs
Is Binance under threat?
Yes, Binance faces several threats, including regulatory scrutiny, legal challenges, and stiff competition from other cryptocurrency exchanges.
Did the owner of Binance lose money?
Binance is set to pay $4.3 billion in one of the largest corporate deals in US history. As part of the deal, Zhao will pay a $50 million fine and step down as CEO.
What is the biggest risk in crypto?
The biggest risk in crypto is its volatility and regulatory uncertainties. Cryptocurrency prices can fluctuate wildly, and there is no guarantee that they will always go up.
ABG Shipyard has been making news in recent days. The scam by this shipbuilding business has not only placed the Narendra Modi administration under scrutiny but has also thrown the opposition and the Modi government into a political fight. The ABG Shipyard Limited, a Gujarat-based shipbuilding enterprise, was accused of defrauding a consortium of 28 banks, including the State Bank of India (SBI), IDBI, and ICICI, for Rs 22,800 crores.
Without a doubt, ABG Shipyard is the largest private shipyard in India. The organisation has a large client base around the globe. They are the first to create all-aluminium jet-propelled watercraft that are powered by diesel-electric dynamic ships.
The company’s registered office and yard are both located in Surat, Gujarat. The company’s first ship was delivered in the year 1990. In the 15 years after its inception in 1991, the firm has grown to become India’s largest private sector shipbuilding yard, with a global client base of happy clients.
AGB Shipyard Fraud: How Did the Fraud Come to Light?
Based on a complaint from the State Bank of India, the Enforcement Directorate filed a money-laundering investigation against Gujarat-based ABG Shipyard, which has been described as being implicated in “India’s biggest bank scam in history.” The company’s chairman, Rishi Kamlesh Agarwal, has been questioned by the CBI for defaulting on loans of Rs 22,842 crore that ABG Shipyard obtained from 28 banks.
According to the CBI, a forensic audit conducted by Ernst & Young in 2019 indicated that funds were diverted to other linked firms, with loans reportedly being utilised for investments through offshore subsidiaries. According to the examining agency, these loans were not utilised for the intended purpose, thereby breaking the agreements.
AGB Shipyard Fraud: Actions Taken by SBI Against the company
On November 8, 2019, the SBI filed a complaint on a very serious note in order to get strong clarifications, and on March 12, 2020, the SBI requested explanations too. In August of that year, the bank filed a new case. The CBI moved on the complaint after “scrutinising” it for over a year and a half, registering the FIR on February 7 this year.
The SBI said in its lawsuit that the problem was caused by the global economic slump and the shipbuilding sector, according to the news agency Press Trust of India. It had “affected the shipping sector as a result of a drop in commodities demand and prices, as well as a drop in cargo demand.”
AGB Shipyard Fraud: Banks Involved in the Case
According to a case filed by the State Bank of India, AGB Shipyard owes the bank 2,925 crores, ICICI Bank 7,089 crore, IDBI Bank 3,634 crore, Bank of Baroda 1,614 crore, Punjab National Bank (PNB) 1,244 crore, and Indian Overseas Bank 1,228 crore (IOB).
According to CBI, the funds were utilised for reasons other than those for which they were given by banks. The Enforcement Directorate (ED) has opened a second money laundering inquiry into them.
AGB Shipyard Fraud: Why Is It Considered As India’s Biggest Bank Fraud?
Previous diamond merchant Nirav Modi and his uncle Mehul Choksi’s scams totalled about Rs 14,000 crore, while Vijay Mallya’s fraud was Rs 9,900 crore. The case of AGB Shipyard has crossed amounts of all the previous scams in history.
Former Chairman and MD of ABG Shipyard Limited Rishi Kamlesh Agarwal, former executive director Santhanam Muthaswamy, and directors Ashwini Kumar, Sushil Kumar Agarwal, and Ravi Vimal Nevatia have all been charged by the investigating agency and the officials. Meanwhile, searches have been carried out in 13 ABG Shipyard facilities.
ABG Shipyard is the subject of a forensic audit that was organised and conducted by Ernst & Young LLP. Between April 2012 and July 2017, it uncovers evidence of fraud. According to the audit, fraud was committed through “finances diversion, theft, and criminal breach of trust, with the goal of gaining unlawfully at the expense of the bank’s funds.”
ABG Shipyard received loans from 28 institutions in the form of three distinct types of loans. The funds generated from these loans were subsequently funnelled through 98 sister concern firms for mostly personal benefit.
AGB Shipyard Fraud: Timeline of the events
1985: The ABG Group’s flagship enterprise, ABG Shipyard Ltd, was founded. It was run and operated by Rishi Kamlesh Agarwal and is in the shipbuilding and repair industry, with shipyards in Gujarat’s Dahesh and Surat cities. It is financed by a consortium of 28 banks, with ICICI being the principal bank.
2005-2008: Despite warnings of danger from the global financial crisis of 2008, banks continue to lend grandly to ABG Shipyards.
2008: The worldwide financial crisis, which was sparked by the housing bubble in the United States and the fall of Lehman Brothers, affected ABG Shipyards.
2014: Under corporate debt restructuring, or CDR, SBI tries to restructure debts to ABG Shipyard. The reorganisation failed terribly because ABG Shipyards was unable to pay the interest and instalments on time and with parity.
2019: SBI identified the fraud in January 2019.
2020: SBI filed a complaint in 2019 and then again a detailed complaint in 2020.
2022: ABG Shipyard and ABG International Private Ltd are both booked by CBI. According to the CBI’s FIR, ABG SL owes a total of Rs 22,842 crore.
The CBI has issued lookout notices for Rishi Agarwal, ABG executives Santhanam Muthuswamy and Ashwini Kumar, and founder Rishi Agarwal.
Meanwhile, the opposition, led by the Congress party, had accused the Narendra Modi administration of participating in “India’s biggest bank fraud” of Rs 22,842 crore, which is larger than Nirav Modi and Mehul Choksi’s PNB scandal of Rs 14,000 crore and breaks the history of scams. The BJP government at the Centre pointed out that the fraud occurred during the UPA administration, the Congress retaliated by questioning why it took the CBI and SBI nearly seven years to find the crime. Along with that, the banks are in a terrible position of attempting to recoup their losses.
FAQ
What happened to ABG Shipyard?
The CBI has filed a complaint against ABG Shipyard for cheating 28 banks of Rs 22,482 crores.
Who is the owner of ABG Shipyard?
Rishi Kamlesh Agarwal is the owner and chairman of ABG Shipyard.
Money is the basic set of resources everyone needs. While there are two methods to make money, one is through hard, slow and honest work and the other is by duping people fast, people tend to choose the second. In this world where everyone wants to afford things fast it has been increasingly seen that people are trying to find shortcuts to everything. This, of course, is not the right thing to do. You cannot get rich tomorrow, by any means.
It is true that you need money to be stable and all. People all over the world try hard to amass as much as they will be needing in future. However, some notorious humans try to dupe the rules and regulations that are made to safeguard the integrity of the nation. They try to avoid taxes illegally, try to amass much money that is either illegally earned or hidden and transported by any means. This article talks about that issue, which has money as the epicentre.
The conflict of money laundering in this world. We will first develop a little understanding of what money laundering is and then we will discuss what has been the cases that had the largest impact on the world. This article will end with precautionary measures. Read on to learn something about the loophole called money laundering.
Money laundering can be defined as some window dressing that is done to the ‘money’, to make it appear as if it was legitimately earned. It is to ensure that illegally earned money (Or even black money) looks white and pure and looks legitimately earned. It is done with some tweaks to prevent any issues that might happen in any future transactions. Thus, Money laundering makes the illegally acquired money look as if it has been obtained genuinely.
This method can be used for more than one purpose like it can be used to change or hide the nature, location, source, situation and even the movement of criminal activity. It makes the proceeds that are earned from illegal activities look legitimate and legal.
In simpler terms, laundering is the process by which hides or converts illegally earned income. It helps criminals get away with getting their money a clean and clear image. The process of money laundering is a huge criminal behind all that is wrong in the world. It provides a safe and secure passage for all the proceeds that one can earn with bad works. Any activity that is illegal, wrong and criminal is effectively hidden by the means of money laundering.
It can be drug trafficking, or even as much heinous as terrorist funding, laundering makes it look legitimate and legal. Thus, the process of money laundering is something that converts the money (from any criminal activity) to money from a legitimate source, thereby maintaining the credibility of the money earned.
Laundering is a serious crime and is done in probably every country in the world. Not only is it illegal but it is also immoral. It is such a serious problem that it encompasses both the white-collar and the street-level criminals. The roots of this business run deep in many parts of the world.
How Does Money Laundering Work?
The process of money laundering is super important for tricksters and all the criminal organisations all over the world. It is their only way on which they can rely to get their illegal money in a legitimate manner.
They are so reliant on this method that they are even ready to pay a lot of money in return for laundering money for them. This is how much they are ready to launder their illegal money. This process is not often easy, it has to be done with precise work of hands.
Anything wrong here or there can demolish the whole organisation. To avoid any errors and issues, there are different phases through which it happens. There can be many illegal ways to launder money but some points in the process are always the same and constant. We here will discuss those three common touchpoints which are common in most money laundering cases –
There are three predictive points and those are –
Placement
This is mostly the first step in a money laundering process. The first is always the entry of illegal money into the system. As soon as illegal money is placed in a tight spot, it becomes necessary to layer it with a protective genuine financial system or to cover them in legal ways.
Layering
Layering refers to the layering that is needed to cover the fingerprints on the notes, not exactly but similarly to a criminal investigation. Layering is layering the money with various transactions and accounting or bookkeeping tricks. Any accounting loophole that can hide the source of the unaccounted money, is useful here. Not to mention that it is done by experts having good knowledge and bad intentions.
Integration
The cash that is laundered through layering it with multiple accounts and transactions are now withdrawn. It is withdrawn in order to return the proceeds to the original criminal that will look like legitimately earned money. This is the integration of money in one place.
All these three methods are the most commonly seen and mostly seen/abbreviated steps in the money laundering process. But it is here to note that there can be more steps than just these three. There can be more layers and more routes by which money is integrated.
Common Methods of Money Laundering Used by Criminals
Exports
There can be Exports that are faked multiple times, in fact, it is one of the common ways criminals do this. A fake export can look like the money is legitimate and is travelling to some other country or province in some official manner. It was very frequently used in Europe in recent years.
Stock Markets
Another unsaid method is via investing the money out. Stock Markets are the major regulator of money supply and the money can be hidden behind this big money machine. Anyone can purchase shares, stakes to bonds from stock market brokers in any part of the world. Noting that the Stock market has a ubiquitous approach in all its workings, more money can be transported and invested in these money markets. Stock markets capitalise on the transaction and make it look legitimate.
Expensive Paintings
If you are a Hollywood fan, then this method would be quite familiar to you. It is evident in movies that gangsters buy some expensive art to cover the money that they have. Thus, Antiques and paintings that are ridiculously expensive can be used too. Hide money or even turn the illegal black money into legitimate white money.
Electronic Means
Then comes the smart modern way of pulling out money laundering. That is, by Electronic means. It has become increasingly easy to transfer money to each other’s wallets. This has not to mention also eased the hard work of money launderers. Now you can just transfer money with a click of a button or a few taps. Electronic means provides a wonderful and magical opportunity to exchange money without revealing its true identity or form.
If you are a modern thief, this trick would come in really handy. Criminals can convert real money to untraceable digital money, which is super hard to trace. That illegal or black money can also be stored in a cloud of games and rewards. It can be distributed through auctions and sales through gambling websites.
Cryptocurrency
If you move ahead in technology and money transactions, you will hit a block. That block is no other than the blockchain. As the world of cryptocurrency rises, so do the concerns of money management all over the world. It is forecasted that it will become extremely easy to get away with black money in the form of cryptocurrencies. What can be worse? They are not even regulated with one organisation, it is power in the hands of people and what if they fail to manage the power. Although there are proper ledgers at place working overnight to record all the transactions, it still can be hard to track individuals involved in the theft.
Up till now, we have all learnt that money laundering is a complex process and can include many forms and types. This calls for some real study on scams that the world has witnessed already. Let us now discuss which tricksters (read criminals) were able to dupe the national security laws of money laundering. This is the history that saw some of the biggest cases of money laundering in the world –
HSBC
HSBC was one of the top firms that showed signs of money laundering. The organisation was tried by the senate. It came under the limelight in the year 2012 when the United States Senate triggered a search in its operations.
On further investigations, it was found that they were breaking AML laws. AML here is Anti-money laundering laws. It was found that the entity HSBC was found to be guilty of the following frauds and illegal activities.
Firstly, they offered banking services to clients hailing from Saudi Arabia, even after knowing the fact that the clients had contacts with terrorists. HSBC sanctioned money transactions from Iran and North Korea without raising any sort of ticket that signifies any issue with those transactions.
HSBC let a subsidy of them having relations with a Mexican counterpart go, even when that counterpart had ties with drug trafficking. HSBC ignored all the risky factors and let the relationship with such a threat of an organisation go without any issue.
The reports say that an estimate of about 881 million Dollars was laundered in summation. This was a huge amount and the entity was banned from any workings for the foreseeable future. HSBC was a reminder that every entity has to be regulated so that it runs according to the lines seated by AML laws. HSBC was fined $1.9 billion dollars for laundering money.
BCCI (Bank of Credit and Commerce International)
The name BCCI is an acronym for Bank of Credit and Commerce International. It is a name now long forgotten. It was however not the same in history. In the mid 19s, BCCI was the seventh-largest private bank in the world. In the mid-1980s the bank was found to be involved in some really serious business of money laundering and even drug smuggling.
BCCI was found with sums of money that were in billions in criminal profits. The name that is forgotten now is estimated to have hidden and laundered a sum of almost 23 billion dollars. This much money was laundered and the bank made a name for itself in the black market of thieves and money launderers.
It is reported that the bank was too picky of its clients, it had relations with some really big names in the industry. BCCI has been reported with relations with Saddam Hussain (Former military dictator of Panama Manuel Noriega) and Palestinian terrorist leader Abu Nidal. By 1990 BCCI was entangled in its own corporate structure and ran into obscurity. That was when the time came for its investigation.
The US Senate report says that Price Waterhouse started an investigation on this matter. The credit and commerce bank shut down its operations even before the investigations were completed.
Even after an early shutdown, the bank owed hefty amounts of fines due to the AML (Anti-money laundering) laws it broke. It was also reported that the CIA (Central Intelligence Agency) user accounts listed on the BCCI, to fund Afghan Mujahideen during their war with Russia (The soviet union) in the 1980s. On the land of money laundering accusations, the Bank of Credit and Commerce transferred about 20 billion dollars in money laundering
Nauru
Nauru Island
Nauru is the name of a tiny pacific island. It is about 1100 miles away from the coast of New Guinea. The place might be small and dingy but it is quite an epicentre of money laundering. This small land has been the go-to place for the highest-profile of criminals and gangsters. In the late 1990s, Russian criminal gang lords laundered about 70 billion dollars through banks that were registered in Nauru. Those banks were mostly called ‘Shell’ banks.
Shell banks are the banks that exist only on paper and nowhere else in real life. They cannot be traced on a map, nor do they have any physical office/branch in real life. Nauru even allowed those banks to record transactions without naming the people behind those transactions. This was done to incentivise more and more transactions. The small land of the Nauru coast of Australia turned into a shell corporation heaven for the Russian mafia. The place is now only known for being a money-laundering favourable place after being a natural resource hotspot.
After the US treasury found out about the illegal money business going on in Nauru, they imposed heavy sanctions on that land. Only to surprise, it was found that the penalties were even more than the penalties imposed on Iran (Another laundering place).
With factors like those of Shell Banks, and recording money transactions without account names, cooked all this hassle. All of the factors above made Nauru a safe place for money launderers. The island has been blacklisted and all the shell banks that were once there, are deregistered on the spot. Since 2001, Nauru has taken steps to clean up its act and has accepted financial aid from Australia.
Standard Chartered
Standard Chartered is one of the biggest banks in the world. This humongous financial institution was accused of helping out the Iranian government to launder an amount of about 265 billion dollars. This huge amount was reported to be laundered as there were not enough/sufficient checks at places. This lack of governance of checks and looks made this big money to be transported illegally.
When it was investigated and regulated by concerned authorities, the organisation paid about 350 million dollars in fines in 2012. Standard Chartered also paid 350 million dollars again in fines and settlements in 2014 for not improving their AML (Anti-money laundering) face and compliance with the assigned rules. After that, they improved their AML sector within the organisation and since then, it has been on a check.
Pablo Escobar
All the Pablo fans out there, do you know how big that criminal was. Pablo Escobar, the most successful criminal ever known to known history. He was so rich and had money in such amounts that it is said once, he spent 1000 dollars in a consecutive week on rubber bands which were used to hold up the bundles of cash that he had. Not to mention, his business was drugging and although the business was illegal, he was a master of the trade.
He was so good at the drugs business, it is reported that he once in time-controlled about 80 per cent of the world’s drugs business (Cocaine trade). With such a hold over the most profitable business, he had loads of money. And because of that, he was forced to make more ways to launder his money to look legitimate. He was so into money laundering that probably the epicentre of his business was just that, ‘Cash Laundering’.
The recipe that he followed in getting all the money back to himself was simple. He paid bankers some bribe to which they returned the favour by turning his black cash into legitimate money. In 1989, reports say that his personal fortune was worth about 9 billion dollars, which made him the seventh richest person in the world at that time. He died in a gunfight in 1993 with Colombian authorities.
Wachovia
It is now a part of Wells Fargo, Wachovia was among the biggest banks in the United States in the 2010s. The bank was found to have allowed drug cartels in Mexico to launder close to US$390 billion through its branches during 2004-2007. The drug cartels had one job specific to money laundering. They laundered money (Proceeds) that came from selling drugs in the United States to the other side of the Mexican Border. Then, they used money exchangers to deposit the money into their bank accounts in Mexico.
“Wachovia’s blatant disregard for our banking laws gave international cocaine cartels a virtual carte blanche to finance their operations,” said Jeffrey Sloman, the federal prosecutor. Yet the total fine was less than 2% of the bank’s $12.3bn profit for 2009. On 24 March 2010, Wells Fargo stock traded at $30.86 – up 1% on the week of the court settlement.
At the Mexico border, the requirements were not clear and regulated which added to the money laundering situation. The regulatory requirements with regard to the source of funds were not on par with current standards. Later on, the money that was transported to Mexico was roped in back to Wachovia’s accounts in the US. The total money laundered by this bank amounted to 390 billion dollars.
Now you must be thinking about what happens if the situation is not controlled, and that is a legit question. If money laundering is not stopped, it can raise havoc. How? Let us find out –
When some money is unaccounted for and lies around in society, it can be used for any purpose. The intentions can be constructive as well as destructive. Depending on the purpose, it can create a ruckus for the society we live in.
As we all know, money can be used as an incentive for many things, it can be an incentive for good things, hardworking and it can also be an incentive for bad things for society. In that situation, the social and political cost of such money can be severe.
In addition to that factor of thought, money laundering can weaken society as a whole. It can lower the boundaries of social and collective ethical standards. In developed countries, it can be efficient and effectively used in terrorism and any sort of destructive activity or behaviour.
On the other hand, if unaccounted money or money laundering is in an underdeveloped country then it can be serious damage to the progress of the country and the integrity of such a nation. For example, those examples can be disastrous in the second most populous nation, India.
What are the Precautions for Money Laundering?
There can be precautions as well for this money laundering influence. These precautions can lead to a safer environment for all, the government and the citizens. Let us discuss some of the precautions that are advised by experts and are worth a read –
Tax Evasion
First of all, the process of one laundering starts from the intention of tax evasion. At the heart of the issue is hiding the income to save some pennies of taxes. This has to be completely stopped. Tax evasion has to be stopped in all steps of production to consumption. This will help make people aware of the monitoring. This will also reduce significant money movements from one place to another.
Local governments should be held accountable for the money management of an area. They have to be fully authorised as well to do their duties on full throttle. For this purpose, the government and the media can work hand in hand to be more effective in maintaining the secrecy of sensitive topics.
Reducing Tax-free Earnings
The private sector has to be regulated as well. Cartels should be prevented and any sort of underground economy should come to an end. This can be done by reducing the tax-free earnings as much as possible in nature. This can be hard for developing countries, as they rely on taxes for development but they can do small changes as well.
AML(Anti-money laundering)
Businesses can protect themselves by strictly accounting for all the transactions as well as adhering to the AML(Anti-money laundering) norms. For which they can use the AML software available in the market such as Sanction scanner and many others available throughout the internet.
AML (Anti-money laundering) Initiatives
Throughout the article, we have mentioned something called AML, we did mention it but what it is actually? Anti-money laundering is a set of initiatives that rose to global prominence in the year 1989. They were formed by a group of companies and countries who were concerned about the issue. It is an entailing part of the Financial Action Task Force (FATF). The mission of which is to prevent and control the money transactions that are unrecorded and benefit from money laundering all around the world. In October 2001, following the 9/11 terrorist attacks, FATF expanded its mandate to include combating terrorist financing.
Another important organisation that controls the fight against money laundering is the IMF or the International monetary fund. Just like the FATF, the IMF also runs on a mission of preventing money laundering as they assert influence on countries and corporations to act according to the accepted international standards.
Laws like these are effective and work in a manner that prevents market manipulation, trade in illegal goods, corruption on public funds and even tax evasion on a global level (large scale).
Laundering is a serious crime and is done in probably every country in the world. Not only is it illegal but it is also immoral. It is such a serious problem that it encompasses both the white-collar and the street-level criminals. The roots of this business run deep in many parts of the world. With this rooted problem, it can be a serious hindrance to the development of countries and even corporations at a smaller level.
There are many international corporations like the FATF (Financial Action Task Force) and IMF (International monetary fund) trying to influence these numbers. Reading the history of money laundering, it is threatening that it can happen today too. In this world where we talk about decentralised currency as the new currency. It is going to be hard to prevent such happenings in today’s world. It does not just harm corporations and societies but even the society and constituents of society.
FAQ
How does money laundering cash work?
The money that needs to be laundered is carried into foreign bank accounts in small amounts and then is transferred back to where it came from.
What is the most common way to launder money?
The most common ways to launder money is investing in gold, investing in stocks or transferring money to foreign bank accounts.
Is laundering money illegal?
Yes, Money laundering is illegal as the laundered money can be used for illegal activities.
India is the birthplace of cultural, grassroots, and frugal innovation. The population of over one billion people makes this an exciting geography for startups to build repeatable and scalable business models. The beauty of startups is that they provide their employees freedom, the opportunity to innovate and explore rather than just to engage in unproductive work. There exists black money within this rising economy of startups.
“The Indian startup ecosystem is said to be the third largest in the world having added over 1,300 tech startups in 2019. Number of Indian unicorns could increase to 95-105 by 2025,” says Nasscom president Debjani Ghosh.
Home of the largest e-commerce deal between Walmart and Flipkart, 31 unicorns and counting, and plenty of untapped opportunities — it shouldn’t come as a surprise that India has been home to some of the biggest startup success stories. Over the years, Indian startups have found success across sectors, with startups in enterprise tech, e-commerce and travel tech grabbing global attention. There has, however, been a grey cloud spanning the growing startup industry in recent years, something we are all familiar with – black money.
Canadian-Indian writer Rohinton Mistry says, “It is so much a part of our white economy, a tumour in the centre of the brain — try to remove it and you kill the patient. A 2015 FICCI report estimated black money in India to be as high as 75 per cent of the GDP.”
In today’s world, it is difficult to explain how a social anomaly could appear in the world of budding talent, making the next generation soar to the highest levels of recognition and profit. This anomaly increases the need for black money in startups or businesses. The purpose of this case study is to analyze the entry of black money into the industry, the factors that influence it, and how it is being whitewashed, as well as the impact this has on our economy.
Current Scenario and Analysis of Black Money in Startup World
Let’s look upon the case where a reputed startup lawyer (let’s name him ‘A’) in the capital has worked with startups including two well-known hotel room aggregators, a funded media startup and few e-commerce firms. He is also involved in deals with a well-known real estate group in the country that is trying to dabble into tech startups. He gives a shocking revelation: “Some expatriate businessmen are using startup investing as a way to move black money into India.”
Here’s the underside, suppose you have $10 million cash parked in Mauritius. You look for tech startups where you can take a majority control or create an entity that can furnish a website, an app and a small team in place. You incorporate the company as a private limited entity and also register an overseas subsidiary. Once a legal structure is in place, you start routing the overseas money into that technology company.
The routing can happen on the seed stage – A funding round. Now to embezzle the funds, from that startup money you can buy a luxury car and other assets, pay yourself, your kin huge sums as directors. You run that company for a period of two years or more till you’ve routed all the money into India. Once done, you can simply close that startup, declaring the company bankrupt and paying off creditors and share-holders which might be your own companies. Even if they have not routed the money overseas, dabbling in startups by opening up mentorship firms has become easy and a glam route to use that money legally.
“Am not saying all such firms are using startups as a means to turn black money into white but this glamorous route has started to be misused in India,” says A, a managing partner of the law firm, requesting anonymity.
Another lawyer (let’s name him lawyer B) who is brokering deals for a Gurgaon-based fashion app and another small hotel rooms aggregator ratifies it. His firm which specializes in transaction advisory for tech startups says that there are many ways dishonest businessmen launder.
An unsavory investor makes his family members the board members of that startup.
Other companies of the same group act as vendors to that startup and quote ridiculous prices for that service or product.
These investors ask for too much equity and control of the startup (often over 70%). They wish to keep their kin on board.
They park the money in a trust-friendly jurisdiction, such as Switzerland, before it is moved to a tax-efficient country such as Cyprus, where the taxation levels are very low or have no taxes. It is then routed to a tax-friendly country like Mauritius, before reaching the final destination in India. India has a Double Taxation Avoidance Treaty (DTAA) with Mauritius.
Trade mispricing is a tool used to siphon off money, plays an important role in bringing money back into India. Instead of inflating invoices, a business can under-invoice and export machinery or software. One can open a company to sell bags or a restaurant. The business may not take off, but the owner can still show cash sales of Rs 1 lakh to Rs 2 lakh a day. Slowly, but surely, all money would be legitimate one day!
Along with the economic effects, black money also has social consequences. Some of them are mentioned below:-
Loss of revenue to the government and running of parallel economy in the country – It is the increase and spread of black money that poses a serious economic threat since it leads to a decrease in government revenues. If only some part of the black money that has been in circulation in the economy could have been paid as taxes to the government, it would have benefitted the Indian economy to a large extent.
Vicious circle as a result of black money and corruption – Black money has added to corruption by the illegal transactions made to hide the black money. Bribes are given by the people to bureaucrats, government officials, etc. This forms a vicious circle which is never going to end unless some serious step is taken by the government.
Effects on national income and real capita income– Black money is a result of revealing low income to the government while paying tax by people which results in low national income of the country. The national income of the country will take a big leap if the amount of black money in circulation is backed up to the national economy of the country. This will also increase the quality of life for the whole country.
Higher taxation and inflation – The main reason behind the taxation is to earn revenues for the expenditures done by the government to make a balanced budget. Therefore, it is obvious that if the amount of black money which the people are hiding from the government is revealed and included in the budget of the government then the tax rate will surely come down as the revenues which the government wants to earn from the people by imposing high taxes will already be with the government. Therefore the amount of goods and services which were there in the market according to the accounted money gets a hike in their prices which results in inflation.
Difficulty in the formation of monetary and fiscal policy – This is an obvious impact as the government while making these policies is not able to count the exact national income because of the hidden black money which makes such policies unrealistic.
Increased criminal activities in society– Black money usually gives rise to various illegal activities in society and corruption is one of them. The duration of the election is also the time when the illegal use of black money can be seen. Various terrorist activities have backup power of hoarders of black money which is even harmful to the whole country. The illegal weapons with various groups of unsocial elements are usually bought up by the use of black money.
The problem of black money should be solved in a real sense and a very rational manner.
First of all the problem is to be dealt with morally. The morals of the people in the society must be raised.
The tax system should be realistic in nature.
The authority which is responsible for the collection of taxes should be honest, without any corruption.
Various incentives should be given so that people voluntarily agree to disclose their real income.
The Economic Intelligence unit must be maintained thoroughly and should be looked after.
The corruption in administration must be stopped at all levels.
Startups should be aware of individuals who ask for higher credit in the company.
Limited kin involvement should be allowed.
The accounts must be looked after by the team and not the angel investors.
The government alone cannot curb this issue completely from society. Making different policies, laws, acts and legislation will not work alone. For the implementation of these laws and policies, every citizen has to come forward. People should understand why it is important to pay tax and should stop evading their income and should not lead to the generation of black income. Every citizen should make some contribution to the development of the country in the form of paying taxes. By doing this, the economy will definitely decrease its black money, as well as startups will not need black money to operate.
The social anomaly could appear in the world of budding talent, making the next generation soar to the highest levels of recognition and profit. This anomaly increases the need for black money in startups or businesses.
What is Black Money?
Black Money is the money that is earned through illegal activity and that money is not recorded for tax purposes.
Are Startups a way to convert black money into white?
Not always, because even startups fail. So if the startup fails, say in 2 years, then your money is gone. But it can be a way to convert black money into white. As the Startups have to pay taxes on raised money.
Can a person convert black money into white through the stock exchange?
No, even the money that is invested in the stock market is invested via banks. So if one breaches their bank limit, it automatically catches the eye of IT officials.
What are the best ways to convert illegal money to legal money?
There is no other way to convert black money into white besides paying taxes. If there would have been a way then no person has to leave their native country and roam like a fugitive.
PMC bank became the talk of the town when it issued an EoI (expression of interest) in order to identify suitable equity investors/group of investors to take over management control and revival of its current state. The EoI was issued in November 2020 and has to be submitted to the RBI by December 15.
The Scam
PMC has been under regulatory restrictions since RBI found irregularities in its financial operations and hiding and facilitating loans to Housing Development Infrastructure Limited (HDIL). Rs. 6200 crore have been exposed to HDIL in this matter. In 2019, Economic Offences Wing (Eow) of the Mumbai police, arrested PMC’s former managing director Joy Thomas in connection with the fraud. The promoters of HDIL, Rakesh Wadhawan and Sarang Wadhawan, too have been arrested and are currently in jail, facing money laundering charges.
RBI found financial irregularities in its transactions and imposed regulatory restrictions
PMC’s total deposits sum up close to Rs 10,800 crore, advances up to Rs 4500 crore, and gross non performing assets of Rs 3500 crore as on 31st March 2020. The bank has a share capital of Rs 293 crore but registered a loss of Rs 6800 crore during the year 2019-20. It has a negative net worth of Rs 5800 crore.
The Revival
In a letter to the bank’s customers and stakeholders, RBI appointed administrator A K Dixit said that the bank has already rolled out various steps in order to recover from its current state. Recovery of bad debts, cutting costs and expenses, rationalizing several branches are a few of the steps taken on the revival front. Essential IT systems are being retained, staff expenses are being kept under a strict check and various means are being found to console the stakeholders and especially the depositors.
RBI kept a strict check on its costs and expenses
The administration stated that the bank is currently rolling out Rs 1 Lakh to all its depositors. Other than that, hardship payments of Rs 5 lakh are being made to those with Critical or life-threatening ailments like Cancer, Covid-19, ailments related to heart, kidney etc.
A particular development has been observed during the revival process that 20 percent of the bank’s nine lakh customers haven’t withdrawn the entire sum of Rs 1 lakh. It looks like a silver lining in the days of doom as there are a few customers that believe that the bank is going to make it through this mess.
Required Investment
Potential investors have proposed to convert PMC bank into a small financing bank but first, it will have to meet the regulations and an approval by the RBI. The administration is reviewing several options of investments for bringing the bank back to life.
RBI is looking for potential investors for the bank’s revival
Currently, with a negative net worth, the bank will need Rs 5800 crore to bring back the net worth to zero and another 1000 crore to maintain the adequacy ratio of 9 percent to restart the business.
Further proceedings
Administrator will weigh pros and cons for each investor and give recommendations to RBI
Initially, four entities had shown interest in investing but only three entities have submitted their interest in the revival of PMC so far. Mumbai based Surindar Mohan Arora (Ideal Group) is understood to have submitted the LoI (letter of intent). Identities of other entities have not yet been ascertained. The last date for submitting the LoI was December 15 2020. An extension has been granted and the investors have been given February 1, 2021 as the final date to submit their final offer. The RBI administrator A K Dixit will be studying the plus and minuses of all the Letters of intent. After their recommendations, RBI will take a call on which entity is suitable for taking over the management control and commencing day to day operations of the bank.
