Banking and Financial News – 09 June 2014

300 bank accounts, 200 firms used to commit Saradha scam: ED - The Enforcement Directorate (ED) has unravelled a complex network of 338 bank accounts and over 200 fictitious companies used by the Saradha chit fund culprits to launder Rs 1,983 crore raised from investors duped in the Ponzi scheme. A senior official confirmed that the latest ED report estimates that Rs 1,983 crore has been laundered in this case and has termed the amount as proceeds of crime as stipulated under the criminal provisions of the Prevention of Money Laundering Act ( PMLA). (Business Today)

Rupee Strengthens Below 59/Dollar, RBI Steps In - The Reserve Bank of India was spotted buying dollars via state-run banks starting around 58.98 on Monday, three traders told Reuters. The central bank continued its heavy intervention to curb strength in the rupee. RBI has been intervening in the market daily, buying dollars to prevent sharp rises in the currency from strong foreign inflows. (NDTV Profit)

Important Financial Terms in the News explained.

Ponzi Scheme: A fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors. This scam actually yields the promised returns to earlier investors, as long as there are more new investors. These schemes usually collapse on themselves when the new investments stop.

Chit Fund Company: Chit fund company means a company managing, conducting or supervising, as foremen, agent or in any other capacity, chits as defined in Section 2 of the Chit Funds Act, 1982.

The Prevention of Money Laundering Act, 2002 (PMLA) forms the core of the legal framework put in place by India to combat money laundering. PMLA and the Rules notified there under came into force with effect from July 1, 2005 . Director, FIU-IND and Director (Enforcement) have been conferred with exclusive and concurrent powers under relevant sections of the Act to implement the provisions of the Act. The PMLA and rules notified thereunder impose obligation on banking companies, financial institutions and intermediaries to verify identity of clients, maintain records and furnish information to FIU-IND. PMLA defines money laundering offence and provides for the freezing, seizure and confiscation of the proceeds of crime.

Money Laundering : When a customer uses banking channels to cover up his suspicious and unlawful financial activities, it is called money laundering. The process of concealing the actual source of the large amount of money obtained from serious crimes, such as drug trafficking or terrorist activity, to create the appearance that the money originated from a legitimate source.

My longest relationship is with God, he’s been by my side through thick and thin. ~ Anonymous

Courtesy : Business Today , NDTV Profit