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IPL, P-Notes in SIT’s cross-hairs to check black money

Shishir Sinha New Delhi | Updated on January 24, 2018

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Suggests SEBI to check unusual share movement, find beneficiary for PN

A law to curb betting in cricket, close monitoring of unusual stock surges and a system to check misuse of Participatory Notes are some of the suggestions the Supreme Court-appointed Special Investigation Team (SIT) has made to curb black money.

In its third report to the government, the SIT, headed by Justice MB Shah, has come out strongly against the Indian Premier League (IPL), stating that the league has been marred by betting, spot-fixing scandals, and the involvement of huge amounts of black money.

Quoting news reports, it said some players are paid more than what is prescribed by the Board of Control for Cricket in India. Also, only a part of the amount is paid through legitimate means.

“It is true that betting is a subject on which State governments have to pass appropriate law, as it is a State subject. However, considering the fact that large amounts of black money are generated and used in this sector, it is suggested that some appropriate legislative directions or rules or regulations are required to be put in place to curb the menace of such betting,” it said.

On the capital market

On misuse of the capital market for money laundering, the panel has said that SEBI should put in place an effective mechanism to monitor any unusual rise in stock prices and inform agencies such as the Central Board of Direct Taxes and the Financial Intelligence Unit to take necessary action. It also suggested that SEBI should find out details on beneficial ownership of Participatory Notes, an instrument used by foreigners to invest in India.

The information on “beneficial owner” should reveal the name of an individual whose KYC detail is known to the regulator. In no case should the KYC information end with name of a company. In case a company is the holder of PN/overseas derivative instruments (ODIs), SEBI should have information of its promoters/directors, the panel said.

The report highlighted that about ₹85,000 crore came in through PNs from Cayman Islands, which has a total population of about 54,000 (in 2010). “It does not appear possible for the final beneficial owner of ODIs originating from Cayman Islands,” it said.

On generation of black money in the education sector and through donations to religious institutions and charities, the report said the CBDT should expeditiously finalise assessments and, if necessary, take punitive action.

On donations

“The person who accepts the donation and the donor requires to be prosecuted under Prevention of Corruption Act. For this, it would require legislative change which is necessary because nowadays, donation to educational institutions, which are in demand, is rampant. In some cases, it goes up to ₹1 crore and more. This would go a long way in curbing the generation and circulation of black money,” it said.

Published on July 24, 2015

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