Professional CAs are acting as Shell Company operators

In the month of March’2017, there was news that almost 54 Chartered Accountants have come under the radar of the Income Tax department and the Enforcement Directorate over money laundering through shell companies.

Professional Chartered Accountants are always found to be the center of various shell company-related transactions. The money movement is masterminded by the Chartered Accountants and is part of the practice of some of these accountants. Out of these 54 Chartered Accountants, who are being investigated by the Enforcement Directorate, 2 prominent Chartered Accountant brothers are Virendra Jain and Surendra Jain.

Shell Company Operators

The news item revolved around the arrest of two Jain Brothers  Virendra and Surendra Jain (Not to be confused with the Jain Hawala Case) in connection with the case.  A search of Virendra Jain or Surendra Jain on the MCA website yields hundreds of results and many of them may not be involved in the actual laundering case. Following observations may be helpful for the professionals in the intelligence and compliance space to understand more about these Chartered Accountants who were also on the board of many privately floated companies.

What do the Riskpro Intelligence Reports Say?

Riskpro has built its own proprietary tool called Biznexxus, which establishes the nexus between the heightened risk professionals with the Indian companies. Here are a few highlights of the Riskpro Intelligence Reports

1. 1. Virendra Jain is the elder brother and is found to be associated with more than 46 companies
   2. Surender Kumar Jain, the younger brother is found to be associated with 14 companies.
   3. More than 90% of the companies where Virendra and Surendra are associated were incorporated in Delhi.

The most important finding of our intelligence study is that  Virendra and Surendra Jain aka Jain brothers were found to be directly or indirectly associated with the leaders of the Bahujan Samaj Party from Uttar Pradesh. This indicates that there is a likelihood of the political money being systematically transferred through the layers of the bank accounts.

It was also observed that one of the companies represented by the Jain brothers, who are alleged of laundered thousands of crores from 2004 – 2015, has raised more than Rs. 400 crores from the Public Sector Bank, exposing the Public sector bank to reputational risk

This article is one of the first articles in the series of Riskpro Intelligence Articles based on the biznexxus database.