In several cases funds were sent to individuals in Thailand, which has become a money-laundering hub.
According to information received by the Income tax (I-T) department under the agreement with Thailand, the purpose code (S0305) meant for ‘overseas education’ was used to mislead banks and money transfer operators to move funds to Thailand.
In multiple cases, individuals have used dozens of fake permanent account numbers (PANs) with the same name but different addresses and dates of birth to transfer money under RBI‘s liberalised remittance scheme (LRS) which bars a resident from spending and investing more than $250,000 a year abroad.
Outward remittances: NBFCs don’t need prior RBI nod for dealer tie-ups
Wrong code and incorrect PANs helped to bypass the LRS limit and obfuscate money trail.
“We have stepped up vigilance to stop such irregular outflows-all the more in the current situation with the rupee under pressure,” a senior tax official told ET. “One person used 47 PANs, another had 27. There are several such cases,” he said.Certain transactions were traced to many UPI IDs which in turn were linked to gaming websites in Curacao, Malta and Cyprus.
“These are clear red flags. Form A2 is mandatory for all LRS remittances, whether routed through online banking or branches. For the education purpose code, banks typically require documents like the admission letter and college invoice. Thailand is not a conventional destination for Indian students,” said Harshal Bhuta, partner at the CA firm P. R. Bhuta & Co, specialising in international tax and FEMA.
Since the Covid outbreak and China’s crackdown on cryptos, many Chinese crypto traders have migrated to Thailand. There have been arrest warrants issued to persons involved in crypto scam networks along the Thai-Cambodia border.
RBI cancels registrations of 150 NBFCs; around 67 firms from Delhi, 75 from West Bengal
Emanating from cities in Rajasthan, there were transactions of routing of proceeds from cyber-crime and sale of cryptos of unknown origin to Thailand.
The department also stumbled upon a banned online adult content platform, operating through various URLs, paying content creators in India in cryptos. Indian retail subscribers to these sites paid to mule accounts to purchase tokens for accessing content. Offshore gambling platforms, the department found, were collecting payments by players in local shell entities before remitting to outfits in Singapore, Hong Kong, Malaysia, Dubai and Saudi Arabia.
According to technology and gaming Lawyer Jay Sayta, “Illegal offshore betting websites are openly flouting the law and advertising on Instagram and Telegram. Influencers who left the country after receiving summons from law enforcement agencies, are endorsing these websites to Indians. Blocking a few betting apps or social media accounts can’t tackle this menace. The Online Gaming Authority of India should create a special team to continuously monitor and block such apps and social media handles.”