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International Money Laundering Kingpin Arrested in India

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In September 2018, a case was registered on a complaint filed by India’s economic investigative agency the Enforcement Directorate. It alleged Naresh Jain and his associates had engaged in illegal activities such as large-scale money laundering, unaccounted transactions, and Foreign Exchange Management Act (FEMA) violations, among other things.

The Delhi Police have arrested transnational money laundering kingpin Naresh Jain on offenses such as cheating, forgery, and criminal conspiracy.

Jain was detained on 8 December and was sent into four-day police remand, officials said.

According to the police, the investigation has so far revealed that hundreds of trading and tour-travel companies and firms were incorporated in the name of persons recruited by Jain to carry out circular trading, accommodation entries to show bogus turnover, and unaccounted transactions.

"During the course of investigation, several persons who were recruited by the accused and his associates and who were appointed as Directors and proprietors in the shell entities have been examined”, said O.P. Mishra, joint commissioner of police, Economic Offences Wing, Delhi Police.

“It has emerged that the bogus entities were being run from offices opened at various obscure places with multiple entities registered at common addresses", the officer added.

He further mentioned that the accused was carrying out the activities in conspiracy with some unscrupulous importers or exporters for hefty commissions.

"Such importers procure false ‘Bills of Entries’ from foreign exporters at very low rates to evade the import duties and pay the substantial balance amount towards such imports through the bank accounts of the shell companies being operated or controlled by Jain and his associates", Mishra said.

Talking about the modus operandi, the officer said that Jain along with his accomplices had hatched a criminal conspiracy to forge and fabricate documents. It was to cause loss to the government exchequer by providing accommodation entries to the beneficiaries and indulging in illegal foreign exchange transactions.

"Forged documents like identity proof, birth and education certificates, Voter IDs, PAN cards and Letterheads were prepared to incorporate entities, for operating bank accounts, facilitating bogus, over-invoiced and under-invoiced import and export transactions, and rotation of funds through web of shell companies", Joint Commissioner of Police Mishra stated.

In collusion with his associates, Jain incorporated and operated around 450 Indian entities and over a hundred foreign entities for carrying out the international money laundering operations and domestic operations of providing accommodation entries to co-conspirators, i.e. the beneficiaries in lieu of his commission.

The officer shared that bank accounts were opened and operated in the name of such shell companies and firms for carrying out the layering of transactions. It was in order to cover up the actual source and destination of the flow of funds. The circulation of funds in the network of shell companies and firms were further destined to bogus tour and travel firms.  

He said, “The Tour & Travel firms further used to transfer funds for fictitious travellers through Foreign Outward Remittance against travel expenses to overseas companies being managed by the cartel being run by the accused Jain".

The syndicate has been operating off-shore bank accounts opened in the name of shell companies in countries like Hong Kong, Singapore, and Dubai etc., the officer added. 

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