7 South Asian nations team up to tackle black money

Seven countries in the South-Asian region may come together to set up a regional intelligence and coordination centre — to be called SARICC — to tackle the menace of money laundering and illicit financial flows.

This is the first time an attempt is being made to establish such a centre in South Asia, Revenue Secretary Hasmukh Adhia said at a conference titled ‘Networking the Networks’ here on Monday.

India — which holds a focal geographical point in the region — is conscious of its role and is spearheading this initiative so as to have a coordinated action against money laundering and illicit financial flows.

Besides India, the countries that are part of the initiative of setting up of the South Asian Regional Intelligence and Coordination Centre (SARICC) are Nepal, Bhutan, Bangladesh, Myanmar, Sri Lanka and Maldives.

Representatives of the seven countries will on Wednesday discuss threadbare the SARICC initiative and its terms of reference. However, both Pakistan and Afghanistan are notably absent from the initiative.

Speaking at the conference, Finance Minister Arun Jaitley said that lives of those who evade taxes and stash unaccounted funds abroad would get “extremely difficult” in the next one-to-two years once the globally agreed system of automatic information exchange comes into effect.

“The world is increasingly moving to a situation where you can’t shift the profits earned in one jurisdiction and erode the tax base of that jurisdiction,” he said, adding that various separate initiatives under the aegis of G-20 are already underway to rein-in tax evaders.

Jaitley highlighted that flight of capital can happen nowadays without actually physically shifting the money. “Within a matter of minutes it can cross over into several jurisdictions,” he said, adding that it is this enormity of problem that comes in the way of a country on its own strength and ability to “smash out the international syndicates”.

“It is therefore important that to counter these international syndicates, a network of law enforcers is established. The more you are able to show that the guilty are punished, the better it is for civilised management of economies in the countries,” Jaitley said.

Adhia also said that India was committed to promote close policy coordination among major economies for addressing the challenges of black money and security issues like terrorism, drug trafficking and arms smuggling.

He highlighted that India has the largest double tax avoidance agreements and tax information exchange agreements and these pacts would help improve information exchange.

“The negative effects of money laundering are difficult to quantify. Its clear that such activities damage financial institutions that are critical for economic growth,” the Revenue Secretary said.

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