Sunday, August 22, 2010

Black money trail: CBDT signs pact with fin intelligence unit

Black money stashed abroad by Indians will now be traced more efficiently as Central Board of Direct Taxes (CBDT) and the Financial Intelligence Unit (India) have signed a pact to exchange information on tracking unaccounted funds, say official sources.

Under the agreement, a nodal officer will be appointed from each organisation to ensure the exchange of information. Furthermore, a periodical review of information will make it more effective in checking the black money flow.

"The MoU (Memorandum of Understanding) also provides scope for obtaining information on any investigation conducted by the Indian Revenue Service. It will provide another avenue to get information about black money of Indians and NRIs stashed abroad," an official said about the agreement.

The MoU will formalise the exchange of information in accordance with best international practices, he added.
The MoU was signed on Friday by CBDT Chairman S S N Moorthy and FIU (IND) Director Arun Goyal. 

FIU-IND is an independent body reporting directly to the Economic Intelligence Council (EIC), headed by the Finance Minister. It is responsible for receiving and disseminating information relating to suspect financial transactions. 

The CBDT, on the other hand, is the largest consumer of information reported by financial transacting institutions like banks and insurance companies. 

The MoU between CBDT and FIU (India) assumes significance against the backdrop of India's becoming a full-fledged member recently of the Financial Action Task Force (FATF), the sources said. 

FATF is an inter-governmental body, which will enable FIU (IND) to get information from member countries on money laundering. This information can then be passed on to the CBDT, as and when required. 

After a five-year wait, India joined as the 34th member of the FATF. With this, India will have access to information on suspicious financial transactions abroad. 

The issue of black money stashed away by Indians abroad had become a political issue in the last Lok Sabha elections in 2009. Indian is currently renegotiating its tax pacts with various countries like Switzerland to get information on black money parked there