DeMo led to highest fake notes, dubious transactions: Report

New Delhi, April 20

The country’s banks received an all-time high amount of fake currency and also detected an over 480% jump in suspicious transactions post demonetisation, a first-ever report on dubious deposits made in the wake of the 2016 notes ban has revealed.

The banks, including those in the private, public and cooperative sectors, and other financial institutions collectively generated 400% more suspicious transaction reports (STRs) at over 4.73 lakh such dossiers during 2016-17, the report said.

The Financial Intelligence Unit (FIU), which analyses suspicious financial transactions pertaining to money laundering and terror financing as part of the Union Finance Ministry establishment, reported that counterfeit currency transactions in the banking and other economic channels witnessed an increase by over 3.22 lakh instances during 2016-17 as compared to the last year.

This, the report accessed by PTI said, had a link to demonetisaton of two high-value currencies of Rs 1,000 and Rs 500 which was declared by Prime Minister Narendra Modi on the night of November 8, 2016.

“A noteworthy growth was also seen in the number of counterfeit currency reports (CCRs) which increased from more than 4.10 lakh in 2015-16 to over 7.33 lakh in 2016-17, which may also be attributed to the demonetisaton exercise,” it said.

The latest figure is the highest ever since the CCRs were first generated in the year 2008-09. CCRs are “transaction based reports” and they are generated only when a fake Indian currency note (FICN) is detected.

As per FIU’s anti-money laundering rules, the banks and other financial bodies are required to report all cash transactions where forged or counterfeit currency notes or bank notes have been used as genuine or where any forgery of a valuable security or a document has taken place.

The report did not specify the value of such fake currencies detected.

The STRs, that are generated when a transaction either indicates that it has been made in circumstances of unusual or unjustified complexity or appears to have no economic rationale or bona fide purpose, also saw a record high rate of detection during the same period and an over 400% jump from the comparative period just before demonetisaton.

“The number of STRs received in 2016-17 is 4,73,006 which is more than four times as compared to 2015-16 and this increase is attributed to demonetisaton exercise...,” the report said.

It added that some volume of the increase in the number of STRs can also be credited to the outreach steps taken by the agency in sensitising banks and others to comply with the rule of mandatorily filing these reports under the Prevention of Money Laundering Act (PMLA).

“The most notable increase (in generating STRs) was in the category of banks, which recorded almost a 489% increase over 2015-16. The increase was 270% in the category of financial intermediaries,” it said. — PTI