Enforcement Directorate Raids 300 Shell Companies Across 16 States

In one of its biggest crackdown on shell companies, the Enforcement Directorate on Saturday conducted simultaneous raids on around 110 premises and 300 shell companies across the country that were suspected to be involved in dubious and illegal transactions during demonetisation, officials said.

The country-wide operation was carried out across 16 states with multiple teams of the agency raiding premises of about 300 shell firms in prominent places like Delhi, Chennai, Kolkata, Chandigarh, Patna, Ranchi, Ahmedabad, Bhubaneswar and Bengaluru among others.

"Several top business houses being searched in various cities such as Mumbai, Delhi, Chennai, Bengaluru and Kolkata," the official told IANS.

The raids are being carried out under the Prevention of Money Laundering Act (PMLA) and the Foreign Exchange Management Act (FEMA) to investigate instances of money laundering and illegal foreign exchange transactions.

Official sources said the action is part of the mandate given to the ED under a Special Task Force created by the government last month on the directions of the Prime Minister's Office.

The task force was created under the co-chairmanship of the Revenue Secretary and Corporate Affairs Secretary to monitor the actions taken against shell companies by various agencies from regulatory ministries and Enforcement Agencies.

In a statement, the Finance Ministry said last month that harsh punitive action will be taken against shell companies, including freezing of bank accounts, striking off names of dormant companies and invoking Benami Transactions (Prohibition) Amendment Act, 2016.

Shell Companies are those that exist only on paper, and can be used for money laundering.

The statement said there were about 15 lakh registered companies in India and only six lakh of these file their annual returns.