Govt, RBI mull database to track non-cash transactions

The government and the Reserve Bank of India (RBI) have begun discussions to put in place a 'search engine' or a database of all payment transactions in the country as they step up efforts to track black money and establish a money trail to investigate money laundering cases and operations of shell companies.

Preliminary discussions on the issue have been held with the RBI after the finance ministry, income tax department and some investigating agencies deliberated on the issue in the wake of a series of steps to crack down on shell companies and money laundering.

The proposal is to let RBI put in place a platform where all non-cash transactions can be recorded and shared on a need-to-know basis, said a senior government officer familiar with the discussions. "It is not going to be available on tap but will be shared based on a specific request," he explained.

At least two other officers told TOI that the plan needed to be fleshed out as the discussions so far had not yielded a robust mechanism. For instance, a law enforcement agency suggested that the database could be used to establish a trail of transactions often seen in case of a fraud.

However, there are doubts if the proposed tool will be sufficient to help investigating agencies track transactions meant to launder or siphon off money. For instance, a Rs 5 crore cheque payment by person A to B can be tracked but it is possible that A had received Rs 20 crore from person C and the database alone is not seen to be sufficient to deal with the issue.

Similarly, tracking all transactions related to an entity and its key functionaries may be difficult in the current set-up, officials said. The officers said the focus was on corporate data, although data related to individuals would also be available in the database. A trail of transactions is seen to be crucial in the government's bid to remove shell companies, used for money laundering purposes, from the system. These entities, typically with low equity base and little business income, route funds through a maze of companies on commission basis.

While the Financial Intelligence Unit currently tracks suspicious transactions and all cash transactions of over Rs 10 lakh, the mechanism is not seen to be serving the purpose. #casansaar (Source - PTI, Times of India)