Updated: September 24, 2020 7:10:46 am
FinCEN’s files contain a 20-page “intelligence assessment” on the mirror network and list 54 shell companies that they say moved billions of dollars annually from Russia through European stock markets to other jurisdictions starting in 2011.
Several transfers from a bank in Latvia and two electronics companies in the UAE and a number of circular transactions with a Dubai company are among the financial transactions linked to Bhushan Steel Ltd reported by foreign banks to the Crime Execution Network. Financiers of the United States (FinCEN), according to records investigated by The Indian Express.
These transactions, totaling $ 4.39 million, are featured in various Suspicious Activity Reports (SARs) sent between 2012 and 2015 to the US regulatory agency, which enforces money laundering laws, they show. the registers.
In 2017, two years after the last of these SARs was submitted to FinCEN, the RBI initiated bankruptcy proceedings against Bhushan Steel for alleged loan defaults worth Rs 56,000 crore, prompting investigations by the Bureau of Serious Fraud Investigation (SFIO) and the Directorate of Enforcement (ED).
READ | FinCEN Archives: 44 Indian Banks, $ 1 Billion Transactions, Reported to US Regulator.
A year later, the company, which was once India’s third-largest secondary steel producer and the flagship of the Bhushan Group promoted by Neeraj Singal and his father Brij Bhushan Singal, was acquired by Tata Steel for Rs 35,232 crore a through the insolvency process.
Some of the SARs related to Bhushan Steel focus on nested money transfers involving the Meridian Trade Bank, in Latvia, on behalf of a London-based entity. Nesting is a route taken to mask the money trail and occurs when a foreign bank uses the United States correspondent account of another bank for its clients. For FinCen, nesting is of particular concern when banks make transfers on behalf of shady shell companies.
Records show that Bank of New York Mellon (BNYM) flagged at least three nested transactions worth $ 454,822 from Meridian Trade Bank on behalf of London-based Randview LLP between 2014 and 2015. These wire transfers were received in the accounts of Bhushan Steel at Canara Bank and ICICI Bank, and part of 126 suspected suspicious transactions belonging to Meridian Trade Bank that were reported by BNYM in 2015.
“The wires, all flowing through Meridian Trade Bank, a non-BNYM client, are primarily suspicious because many of the entities that bank with SMP Bank (now Meridian Trade Bank) appear to be similar entities to those of a shell that bank in Latvia’s high-risk jurisdiction, but allegedly located in other jurisdictions, ”said one of the SARs.
Editorial | Red-flagged transactions to the US financial watchdog point to major gaps in India’s regulatory architecture
Randview LLP, according to UK Companies House, was founded in London in 2011 by two Mauritius-based brokerage firms: Newcombe Limited and Glaisdale Limited. Incidentally, the Gambian companies linked to the two intermediaries listed in the Panama Papers, a 2018 ICIJ research project with The Indian Express.
“BNY Mellon takes its role in protecting the integrity of the global financial system, including Suspicious Activity Reporting (SAR), very seriously. As a trusted member of the international banking community, we fully comply with all applicable laws and regulations and assist authorities in the important work they do. By law, we cannot comment on any SAR allegations that we have presented or that may have been illegally disclosed by third parties to the media, ”said a BNYM spokesperson.
Another SAR from the Standard Chartered Bank New York flagged alleged suspicious transactions worth $ 2,761,523 between UAE-based electronics firm Great Way General Trading FZE and Bhushan Steel between July and November 2013.
The bank identified 234 transactions worth around $ 1.15 billion belonging to Great Way General Trading. It called the transactions suspicious because the company was involved in third-party remittances, where the funds are transferred with instructions that they be transferred to a third entity, usually an unknown beneficial owner.
Standard Chartered New York also noted a 2012 $ 386,600 transaction between Bhushan Steel and Ultra Grace Ltd, another Dubai-based electronic parts distributor. The bank found that Ultra Grace’s transactions were “inconsistent and unusual” with its core business. The company could not be reached either, the SAR said.
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The New York branch also reported alleged 2012 circular transactions worth approximately $ 797,033.55 between Bhushan Steel and Golden Century Limited, a Dubai-based manufacturer of cosmetics and construction products. The bank identified 208 transactions worth $ 1.29 billion received and remitted by Golden Century globally between May and December 2013.
According to the bank, the value exceeded the anticipated level of activity that was revealed when its Dubai branch established a relationship with Golden Century. Some of these transactions were circular, in round dollar amounts, with unidentified entities and in high-risk jurisdictions, records show.
The SAR also identified 12 Bhushan Steel transactions with Golden Century made through Canara Bank in India. Golden Century was delisted from the UAE business register in December 2018.
“In 2019, we monitored more than 1.2 billion transactions for potential suspicious activity and examined more than 157 million transactions for compliance with applicable sanctions requirements. The reality of the global financial system is that there will always be attempts to launder money and evade sanctions; the banks’ responsibility is to build effective monitoring and control systems and we work closely with regulators and law enforcement to bring perpetrators to justice, ”said a Standard Chartered Bank spokesperson.
READ | FinCEN Archives – Cyprus to Isle of Man: Over 100 Transactions Linked to Max Chairman
Neeraj Singal and his attorney Ranjana Roy Gawai did not respond to emails, phone calls and text messages from The Indian Express seeking comment. Canara Bank, ICICI Bank and Great Way General Trading did not respond to inquiries from The Indian Express. Ultra Grace Ltd could not be traced for comment.
In 2018, Neeraj Singal was arrested by SFIO for allegedly diverting funds from Bhushan Steel. The SFIO has alleged that Singal and his father used illegal means to receive bank loans worth Rs 45.8 billion between 2013 and 2017.
According to SFIO, the funds were allegedly diverted through a network of 157 companies, of which at least 62 were directly controlled by the Singals, 85 were operated through Bhushan Group employees and the remainder managed by gateway operators. Neeraj Singal is currently out on bail.
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