The Financial Intelligence Unit has released a list on 26th February of the 9,500 Non-Banking Financial Companies that are ‘high risk’. The list includes those companies which are non-compliant with the Prevention of Money Laundering Act as on January 31st.
According to the Prevention of Money Laundering Act all the NBFCs should appoint a principal officer in the financial institutions and report any and all suspicious transactions and cash transactions of over 10 lakh rupees. The list of companies released has not complied with these rules. Section 12 requires the reporting entities to maintain a record of all transactions, verify their clients’ identities, and of the beneficial owners in the manner prescribed. For failing to do so administrative action will be taken and a monetary fine will also be issued which can vary between ten thousand to one lakh rupees for each failure.
The list of companies includes Adani Capital Private Limited, Anand Corporate Holdings Pvt. Ltd., Arihant Udyog Ltd., Asian Financial Services Ltd., Avon Money Solution India Limited, Bindal Finvest, Bombay gas Co Ltd., Cello Capital Private Limited, Dlf Finvest Limited, Eros Merchants (P)Ltd., Indigo Fincap Pvt. Ltd., among numerous others.
After demonetisation in 2016, many rural and urban banks were found illegally converting the banned currency notes of unaccounted income. The NBFCs were found converting banned currency notes by receiving cash deposits and issuing back-dated fixed deposits and cheques despite the fact that the RBI had banned them from doing so. As time goes by its becoming quite clear that no institution or corporate can be completely trusted for a multitude of reasons, just when one begins to think that law is in place and loopholes are few, there always emerges a list of people circumventing the process making a fool out of the honest and becoming richer at the cost of the poor.