India’s Enforcement Directorate (ED) has arrested two individuals who acted as entry operators and facilitated large-scale bogus Letter of Credit (LC) discounting and provided large accommodation entries to aid fraudsters in laundering money.
The arrests are a part of an ongoing ML investigation that the ED launched after receiving reports from various investigating agencies against RE Cables & Conductors Private Limited (RECC) and other entities for an alleged misappropriation of bank-obtained funds that led to the loss of over ₹748.3 million ($9.48m).
ED’s investigation revealed that the defendants assisted and guided RECC to fraudulently misuse the credit facilities offered by banks. In the guise of short-term advance, RECC used fake documents to open LCs on behalf of the defendants’ shell companies. Thereafter, a known bank discounted these LCs and the amount received after discounting was transferred back to RECC. The LCs devolved since RECC did not pay the bank, resulting in a massive loss for the bank. The defendants have admitted to receiving a commission of 0.25% for their services. They have also provided such services to various other companies.
Source: Enforcement Directorate, India
