ED busts Rs.10,000 crore black money network led by Chartered Accountants and Hawala operators

Rs.10,000 cr of black money flushed out of country; mastermind caught from Maharashtra’s Thane

A massive network of Chartered Accountants (CAs) and Hawala operators was dismantled with the arrest of a prime accused suspected of orchestrating large-scale black money transfers out of India. The Enforcement Directorate (ED) conducted raids in Mumbai, Varanasi, and Thane, uncovering illegal operations that had been running for several years. Authorities revealed that over Rs.10,000 crore had been funneled to bank accounts abroad, including Singapore, Thailand, and Hong Kong.

The prime accused and his strategy

The operation was masterminded by Jitendra Pandey, a resident of Thane, Maharashtra. Pandey had established an elaborate system involving 98 shell companies and 269 bank accounts to launder black money. During interrogation, Pandey disclosed his association with a network of Real-Time Gross Settlement (RTGS) entry operators. These operators layered transactions across multiple accounts to obscure the source of funds, making detection difficult.

Key details of the strategy include:

• Layering Transactions: Funds were circulated through multiple shell company accounts to mask their origin.
• Final Transfer: The black money was routed through up to 12 private companies before being deposited in foreign bank accounts.
• Fictitious Transactions: The transactions were disguised as payments for importing goods from China, with fraudulent documentation supporting the claims.

Shell companies and freight charges

The shell companies involved in the operation were registered under the “freight and logistics” sector. These entities remitted massive sums to foreign countries, falsely labeled as freight charges. The fraudulent logistics firms played a critical role in justifying the flow of money abroad under the guise of legitimate business expenses.

Involvement of Chartered Accountants

The role of several Chartered Accountants emerged during the investigation. They reportedly assisted Pandey with the incorporation of shell companies, compliance with regulatory requirements, and filings with the Registrar of Companies (ROC). These professionals were instrumental in maintaining the facade of legitimacy for the fraudulent entities.

Previous arrest and investigation

Pandey, along with other co-conspirators, had been arrested by the Economic Offenses Wing (EOW) of the Thane police in an earlier case. The current revelations build upon those investigations, exposing the vast scale and complexity of the operation.

Impact and further investigations

The ED continues to investigate the network, focusing on identifying additional culprits, recovering laundered funds, and tracing the ultimate beneficiaries. The case highlights the critical role played by shell companies and complicit professionals in enabling large-scale financial crimes.

This bust serves as a reminder of the importance of robust oversight and international cooperation in combating money laundering and financial fraud.

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