Sources said that the agency has identified about 500 individuals who established offshore firms through Mossack Fonseca and added that the ED will move against them if any illegality is found in the incorporation of these entities or their financial dealings.
Sources said information has been sought from RBI on whether these entities were set up with permission from the apex bank. FIU has been asked to provide information on these companies or individuals associated with them. The IT department, which has sent a questionnaire to all Indian clients of Mossack Fonseca named by The Indian Express, is expected to convey whether money has been transferred by these entities illegally.
“During meetings held recently on the issue, all concerned agencies have been asked for information. A formal communication regarding this would reach them in a couple of days. Work has already begun,” said a senior ED official.
ED sources said action would be taken against illegal offshore entities under various sections of the Foreign Exchange Management Act (FEMA). They added that the IT department has already sought information from Panama on the basis of reciprocity as there is no Double Taxation Avoidance Agreement (DTAA) with the country.
“The information being sought by IT is about the accounts of these companies and the money deposited in them, apart from details of financial transactions. If the IT department finds any instance of tax evasion and illegal outflow of money, it can book individuals under the Black Money Act. That will open the gates for us to prosecute the individuals under the Prevention of Money Laundering Act (PMLA),” said another ED official.
Once an individual is booked under the PMLA, the ED will also move to attach their properties in India, said sources.
“But a major part of the investigation at the moment is about how many of these companies are illegal or have moved money in violations of laws. There are many who have denied that the company in their name is not theirs,” said the official.
On April 4, following the first set of reports in The Indian Express on The Panama Papers leak, finance minister Arun Jaitley had announced that a multi-agency panel was being constituted to exclusively probe the offshore entities linked to Indians.