Ponzi scam: Govt red-flags over 250 dubious financial transactions

Finance Ministry red-flagged over 250 suspicious banking transactions, most of them related to Multi Level Marketing (MLM) or ponzi schemes and alerted agencies concerned and state governments.

New Delhi: The Finance Ministry has red-flagged over 250 suspicious banking transactions, most of them related to Multi Level Marketing (MLM) or ponzi schemes, this year and has alerted agencies concerned and state governments on them. As many as 272 such transactions were sent to the Central Economic Intelligence Bureau (CEIB) by Financial Intelligence Unit (FIU)-India, an agency tasked with analysing and disseminating information relating to dubious financial transactions to enforcement agencies, official sources said.

Detailed follow-up of some of these Suspicious Transaction Reports (STRs) by the CEIB, which gathers and disseminates intelligence related to economic offences including black money to agencies concerned, has resulted in detection of tax evasion worth crores. These STRs were sent to the CEIB between January and March this year for necessary action. An STR deals with transactions of Rs 10 lakh and above, which gives rise to a reasonable ground of suspicion that it may involve the proceeds of crime including drug trafficking and illegal money. "A large number of these STRs sent to the CEIB were related to Multi Level Marketing cases and were referred to respective state governments. Some of these STRs helped in detecting custom and excise duty, and service tax evasions among others," a source said. These STRs, sent by FIU for further probe, were all banking transactions including cash deposits in bank, cheque clearances, inter and intra banking dealings between individuals. A Ponzi scheme is a swindle in which a quick return on an investment is offered. "A feedback on the STRs sent to state governments on multi-level marketing schemes is yet to be received," the source said. Government`s investigating arms like Sebi, RBI, IT Department and Enforcement Directorate have already begun crackdown on ponzi schemes and initiated action against scam-ridden Saradha Group under various laws including the Prevention of Money Laundering Act (PMLA). The Kolkata-based group is facing multi-agency probe for illegal raising of deposits from investors across West Bengal and some parts of North East India. The Finance Ministry has also warned investors about such companies which are promoting ponzi schemes to siphon off money being collected by them. Market regulator Sebi has launched prosecution in 59 cases of Collective Investment Scheme (CIS), while the Ministry of Corporate Affairs (MCA) is also investigating the Saradha Group for violation of various laws, the Ministry has said. Prime Minister Manmohan Singh had yesterday also stressed on curbing unauthorised chit fund activities in the country. The Supreme Court has also asked Sebi to deal sternly with companies indulging in manipulative and deceptive practises to check market abuse. PTI