MasterCard 038; Visa payments under scanner

In a move to curb money laundering and terror financing through regular financial and banking channels...

In a move to curb money laundering and terror financing through regular financial and banking channels, the Government has finalised a crucial amendment in the law to bring all international payment gateways, including Visa and Master Card and wire transfer agencies like Western Union as well as all foreign exchange dealers into its surveillance and reporting network.

This comes after a series of high-level meetings of the Group on Economic Intelligence attended by officials of the Reserve Bank of India besides officials from all key economic intelligence units.

The amendments have been drafted for inclusion in the Prevention of Money Laundering Act PMLA and are now ready for Cabinet approval.

By classifying all international payment gateways, money transfer agencies and forex dealers as 8220;reporting entities,8221; the law will make it mandatory for them to keep all records and send details of 8220;suspicious transactions8221; to the Financial Intelligence Unit, the nodal agency for receiving and analyzing such data.

Sources told The Sunday Express that the first leads that regular banking channels and wire transfers were being used for terror financing came from the J-K Police after which the IB suggested amendments in the PMLA. It was found that credit and debit card transactions below a 8220;threshold requiring proof of identity8221; provide 8220;faceless or disguised financial access8221; and arrested militants have admitted to using this route. Over the past year, the existing 8220;reporting entities,8221; which include all banks, financial institutions and intermediaries like stockbrokers and foreign institutional investors generated 18 lakh cash transaction report and 650 Suspicious Transaction Reports.

Terror funding: what set off the alarm bells

8226; Two Al Badr militants Mohammad Ali Hussain and Mohammad Fahad, arrested in Mysore in October 2006 confessed to having received Rs 6.1 lakh over four months via hawala and Western Union transfers. Another Rs 3 lakh was received by Mohammad Fahad in his ICICI bank account in Mysore.

8226; Sami Ahmed Shah, an alleged Lashkar operative arrested in Gulbarga in March 2006, confessed to receiving Rs 3.5 lakh over a 2-year period in Goa through Western Union. Each payment was of Rs 10,000, which was to be used for attacking foreigners in Goa and sending operatives for training to Pakistan.

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8226; An ISI agent, Laraib, arrested in Lucknow in September 2006 was using a debit card provided by his 8220;handlers.8221; He used an ATM for withdrawals.