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Economic Offender

Fugitive Economic Offender

After Vijay Mallaya, now Nirav Modi is under extradition process in UK Court already he was arrested recently.

Who is Nirav Modi?
In its complaint, Punjab National Bank (PNB) has alleged that the Rs 11,000 Crore worth fraud was led by Nirav Modi, a jeweller who’s No. 85 on Forbes’s 2017 list of India’s richest people. It is alleged that Modi was helped by a former PNB employee to get illegal loan in overseas by bypassing SWIFT and Letter of undertaking (LoU).

SWIFT (Society for World Interbank Financial Telecommunication System) platform

  • SWIFT is global financial messaging service that enables financial institutions worldwide to send and receive information about financial transactions in secure, standardized and reliable environment.
  • It is used to transmit messages relating to cross border financial transactions.
  • It was founded in 1973 and is headquartered in La Hulpe, Belgium.
  • It is a cooperative society under Belgian law owned by its member financial institutions with offices around the world.
  • Globally over 11,000 financial institutions in more than 200 countries use services of SWIFT.
  • SWIFT does not facilitate funds transfer, rather, it sends payment orders, that must be settled by correspondent accounts that institutions have with each other.
  • On receiving this message through SWIFT, banks abroad, mostly branches of domestic banks abroad provide funds to the company.

Fugitive Economic Offender:

The fugitive economic offenders’ law came into force in August last year. A person can be named an offender under this law if there is an arrest warrant against him or her for involvement in economic offences involving at least Rs. 100 crore or more and has fled from India to escape legal action.

The procedure:

  • The investigating agencies have to file an application in a Special Court under the Prevention of Money-Laundering Act, 2002 containing details of the properties to be confiscated, and any information about the person’s whereabouts.
  • The Special Court will issue a notice for the person to appear at a specified place and date at least six weeks from the issue of notice.
  • Proceedings will be terminated if the person appears. If not the person would be declared as a Fugitive Economic Offender based on the evidence filed by the investigating agencies.
  • The person who is declared as a Fugitive Economic Offender can challenge the proclamation in the High Court within 30 days of such declaration according to the Fugitive Economic Offenders Act, 2018.

India’s 9-point agenda against fugitive economic offenders

  • Strong and active” cooperation among the G-20 nations. The document highlights the importance of cooperation in legal processes such as “effective freezing of the proceeds of crime; early return of the offenders and efficient repatriation of the proceeds of crime should be enhanced and streamlined”.
  • Joint efforts to be made by the G20 nations to form a mechanism that denies entry and safe havens to all fugitive economic offenders.
  • There is need for the “effective” implementation of the principles of the United Nations Convention Against Corruption (UNCAC) and the United Nations Convention Against Transnational Organised Crime (UNOTC).
  • The Financial Action Task Force (FATF) should be called upon “to assign priority and to focus on establishing international co-operation that leads to a timely and comprehensive exchange of information between the competent authorities”.
  • The FATF should be tasked to formulate a standard definition of fugitive economic offenders.
  • The FATF should also develop a set of commonly agreed and standardised procedures related to identification, extradition and judicial proceedings for dealing with fugitive economic offenders to provide guidance and assistance to G-20 countries, subject to their domestic law”.
  • There is need for setting up of a common platform “for sharing experiences and best practices including successful cases of extradition, gaps in existing systems of extradition and legal assistance.”
  • The G20 forum should consider initiating work on locating properties of economic offenders who have a tax debt in the country of their residence for its recovery.

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