Published On: Mon, Jan 5th, 2015

Seven overseas units mooted to snoop on customs fraud

New Delhi: Seven overseas intelligence units, including two in China, have been proposed to be set up by the central government in order to check customs fraud.

Finance Minister Arun Jaitley

Finance Minister Arun Jaitley

A proposal for creation of seven Customs Overseas Intelligence Network (COIN) units is pending with the ministry of external affairs. Three COIN units have been proposed at Colombo (Sri Lanka), Dhaka (Bangladesh) and Bangkok (Thailand) with a clear focus on fake Indian currency notes smuggling, official sources said.

Two such snoop units have been proposed at Beijing and Guangzhou because of the exponential growth of trade between India and China and the intelligence supported by cases of undervaluation and anti-dumping duty, they said.

The Directorate of Revenue Intelligence (DRI), lead agency to check customs frauds and smuggling, has also proposed two COIN units in Brasilia (Brazil) and Pretoria (South Africa), the sources said.

The decision to open these two units has been taken due to their increasing importance in view of IBSA (India, Brazil and South Africa) framework, they said.

The proposal is being discussed with the ministries of Finance and External affairs. The home ministry has actively supported the creation of three COIN units at Colombo, Dhaka and Bangkok. The ministry of external affairs has given in principle approval for creation of two posts at Beijing and Guangzhou in China, the sources said.

The proposal to set up the seven new COIN units is yet to be finalised, they said.

At present, there are nine officers posted overseas in Dubai, Hong Kong, Kathmandu, London, New York, Moscow, Singapore and Brussels.

Government has customs mutual agreements with some of these countries which provide the framework to seek information.

The customs authorities have been getting results from COIN officers in New York, London, Hong Kong and Moscow, they said.

With trade expanding and covering more regions across the globe, the new units are essential to have effective development of intelligence on smuggling and cross-border commercial frauds and create a holistic snoop network with an eye on security related issues, the sources said.

A Finance Ministry report on black money has recommended to expand and strengthen the scope and reach of COIN offices to check suspicious trade transactions.

DRI maintains constant interaction with its COIN offices to share intelligence and information through diplomatic channels on the suspected import and export transactions to establish cases of mis-declaration, which are intricately linked with tax evasion and money laundering.

“The scope and reach of COIN offices should be further expanded and strengthened. Customs officers should be stationed in major trading partner countries to liaise with customs authorities of those countries and cause verifications of suspicious trade transactions,” the report has said.

Separately, as a probe continues into misuse of stock markets for routing black money and tax evasion, the regulatory and other agencies suspect that Global Depository Receipt (GDR) route is being used for bringing back suspected illicit funds stashed abroad.

The modus-operandi, in cases currently under scanner, involves an intricate web of entities registered in various jurisdictions, including Switzerland, Hong Kong, Singapore, Mauritius, Dubai and Canada, for multi-layered transfers of funds before bringing them back to India.

Sources said that the capital markets regulator SEBI has come across quite a few cases where GDR route could have been used for round-tripping of funds in the name of capital-raising activities of listed companies from abroad.


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