Karvy Stock Broking Ltd is involved in the money laundering case. It was investigated by AML Watchdog ED. ED investigated the case in detail.
WHAT IS PREVENTION OF MONEY LAUNDERING ACT?
An Act to prevent money-laundering and to provide for confiscation of property derived from, or involved in, money-laundering and for matters connected therewith or incidental thereto. Whosoever directly or indirectly attempts to indulge or knowingly assist or knowingly is a part or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money-laundering.
How does Money Laundering Work?
Money laundering plays a major role for the criminal organization to curb the illegal activities that are taking place. To deal with the huge amount of cash is regarded as dangerous. The criminals are searching different ways to deposit there money in the legitimate financial institutions. The Karvy Stock Broking Ltd is involved in the money laundering activities that were taking place.
There are number of ways to launder money from a very simple to complex thing. Smurfing is regarded as one of the common form of money laundering. In smurfing the criminals distributes the large number of cash. The Money Laundering can be fulfilled by using the different type of currency exchanges.
WHAT IS DIRECTORATE OF ENFORECEMENT?
The Directorate of Enforcement is a multi-disciplinary organization mandated with investigation of offence of money laundering and violations of foreign exchange laws. The statutory functions of the Directorate include enforcement of the following: Prevention of Money Laundering Act, 2002, Foreign Exchange Management Act, 1999, Fugitive Economic Offenders Act,2018, Foreign Exchange Regulation Act,1973 and Sponsoring agency under COFEPOSA.
ABOUT Karvy Stock Broking Ltd CASE
ED identified and provisionally has attached properties in the form of lands, buildings, shareholdings, cash, foreign currency and jewellery worth Rs. 110 crore under PMLA, in money laundering investigation against M/s Karvy Stock Broking Ltd (KSBL) and its chairman Comandur Parthasarathy and others.
ED previously had attached assets of Rs. 1984.84 crore in the same Karvy Stock Broking Ltd case. Presently C Parthasarathy and group CFO Mr. G Hari Krishna are on bail. The ED has attcheda warrant against the Karvy Stock Broking Ltd.
On the basis of FIR filed by CCS Hyderabad Police on the complaints of leading bank ED initiated money laundering investigation. Banks complained that the Karvy Stock Broking Ltd Group has taken loans of large amounts by illegally pledging their clients shares of Rs. 2800 crore and the same became NPA after release of client’s securities as per the order of NSE and SEBI.
The funds were diverted from the stated purpose by set of high ranking functionaries that work under overall control of CMD and the funds were diverted to related companies like KDMSL, KRIL which were set or real estate ventures. Diverted funds were routed to KFSL via multiple NBFC to wash its bad debts and large loan proceeds were transferred to shell insurance companies which did massive share trading with KSBL and suffered massive losses.
Large amounts of crime proceeds are invested by infusing in the form of investments to group companies. This helped in enhancing value of the subsidiary of Karvy Stock Brocking Ltd. Now accused are trying to sell these subsidiaries at profit to earn indirect gains.
- Parthasarthy had made arrangements through his group companies to pay financial benefits to his sons Rajat and Adhiraj in the form of salary and reimbursement of household expenses and this showed proceeds of crime as untainted money in hands of family members. V. Mahesh, MD of KDMSL, senior official and KMP of the Karvy group is close associate of C. Parthasathy and he assisted and planned money laundering.
ED has identified and attached and seized movable assets of Rs. 110.70 crore to safeguard the proceeds of crime from transfer or conveyance.
