Fight against Black money - Indian Anti Money Laundering Initiatives

Black money or undisclosed money causes harm to the society. It is unfair to the people who pay proper taxes. It needs to be dealt with appropriately. At the same time, there should be fairness in the law so that unintended violations are not punished severely.

The Government has introduced a bill – “The Undisclosed Foreign Income and Assets (Imposition of Tax) Bill, 2015”. It has also proposed amendments to Foreign Exchange Management Act and Prevention of Money Laundering law. It will not only affect those who have undisclosed incomes and assets, but also advisors, banks or financial institutions who aid in stashing black money overseas. It will not only apply to direct owners of assets, but also to beneficial owners and beneficiaries in any assets. It will affect those who have foreign holdings through complex structures and trusts.

Stringent penalties and Imprisonment of up to seven years and in some cases up to ten years has been pro¬posed. The proposed law provides for a short window to disclose the undisclosed assets whereby one can avoid imprisonment. One needs to consider and advise on this.

Some of the issues and questions to ask ourselves are::
-Is the entire value of foreign assets affected by the new law, or only the foreign income component?
- Implications of considering the violation as predicate offence under the Prevention of Money Laundering Act.
- Implications of section 37A of Foreign Exchange Management Act – seizure of foreign assets.
- Does the law apply to incomes earned prior to the enactment of the new law?
- Implications on-going investigations due to disclosure of names having foreign accounts in HSBC list and other lists.
- Is there natural justice available in the law for unintended violations?

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