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  1. Black money SIT must be cautious on use of RBI data

Black money SIT must be cautious on use of RBI data

While asking Reserve Bank of India (RBI) to share foreign exchange transaction data with the enforcement agencies may help in tackling black money, the SIT must also tell the government to weed out the...

By: | New Delhi | Published: September 5, 2016 3:53 PM
According to a finance ministry release, chairman, SIT, in a letter on August 11, to Governor, RBI has explained the need for sharing of data with the RBI “in its various databases with the Enforcement Authorities so that the data could be cross checked with other information available with Enforcement Authorities and illicit financial flows could be curbed”. (Reuters) According to a finance ministry release, chairman, SIT, in a letter on August 11, to Governor, RBI has explained the need for sharing of data with the RBI “in its various databases with the Enforcement Authorities so that the data could be cross checked with other information available with Enforcement Authorities and illicit financial flows could be curbed”. (Reuters)

santosh-tiwari-sWhile asking Reserve Bank of India (RBI) to share foreign exchange transaction data with the enforcement agencies may help in tackling black money, the SIT must also tell the government to weed out the possibilities of fishing or roving enquiries based on the information gathered from the apex bank.

While the efforts of the Special Investigation Team (SIT) on Black Money appointed by the Supreme Court in correcting the administrative and regulatory loopholes and sharing of information are no doubt laudable, it must also keep in mind that the track record of investigating agencies like enforcement directorate or income tax department in the handling of financial information has not been impressive.

So, when it suggests that the regulators, especially RBI, share information with them, the SIT must also ensure that these will be handled properly and will not get misused.

According to a finance ministry release, chairman, SIT, in a letter on August 11, to Governor, RBI has explained the need for sharing of data with the RBI “in its various databases with the Enforcement Authorities so that the data could be cross checked with other information available with Enforcement Authorities and illicit financial flows could be curbed”.

This means that the RBI will have to share data captured by the Foreign Exchange Transactions Electronic Reporting System (FET–ERS), along with those related to export outstanding data and advance remittances against imports.

The SIT has asked the revenue department to appoint a single point agency for accessing these databases and also for further dissemination to other enforcement agencies.

Given that Tax Administration Reform Commission (TARC) has also suggested unified data warehousing in the revenue department and the SIT is also pressing for effective sharing of information among various investigative wings, it is high time a comprehensive data gathering and analysis set-up covering all the departments is created in the revenue department on the lines of the Project Insight of the income tax department.

But, just getting the information will not be enough. First of all, instead of asking for heaps of data from the regulators, a better idea would be to first identify the suspicious areas and then act on the basis of credible information and analysis.

With this, the capabilities of the investigative agencies for handling such data effectively and take any investigation to logical conclusion also need to be improved.

The SIT would do well by asking the government to quickly develop an institutional set-up for this before the flow of financial data from RBI begins, so that the whole process doesn’t end up in more confusion and litigation.

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