ED raids 300 shell firms in 100 locations in 16 states
01 April 2017
In one of the largest search and seizure operations, the Enforcement Directorate (ED) today launched country-wide raids at 100 locations in 16 states, as part of its crackdown on shell companies.
Officials said the ED formed several teams and raided the premises of about 300 shell firms in prominent places like Delhi, Chennai, Kolkata, Chandigarh, Patna, Ranchi, Ahmedabad, Bhubaneswar and Bengaluru among others.
Around 20 teams of the Directorate are reported to be conducting searches in 77 shell companies in Kolkata - one of the major areas known to be the hub of such shell companies that deal with fraudulent transactions.
Bengal is one of the major areas where the raids are being conducted since morning.
The raids are being carried out under the provisions of the Prevention of Money Laundering Act (PMLA) and the Foreign Exchange Management Act (FEMA) to check instances of money laundering and illegal foreign exchange transactions.
The action is part of the mandate given to the ED under a Special Task Force (STF) that was recently created by the government on the directions of the Prime Minister's Office (PMO).
The companies came into the spotlight after the agency found dubious and illegal transactions carried out during demonetisation.
Shell companies act as front entities for those individual(s) carrying out transactions and operating companies who don't want their identity to be revealed. These shell companies are used by hoarders and even legitimate business houses to convert black money into white.
Shell companies are set up on a nominal paid-up capital, bur report high reserves and surplus on account of receipt of high share premium, investment in unlisted companies, no dividend income, high cash in hand despite low turnover and operating income.
The ED has recently attached assets worth crores of such firms in the last over a week's time.