Indians are the largest depositors in banks abroad with an estimated $500 billion of illegal money stashed by them in tax havens, the CBI director said on Monday.
India, in particular, has suffered from the flow of illegal funds to tax havens such as Mauritius, Switzerland, Lichtenstein, and British Virgin islands.
“It is estimated that around $500 billion of illegal money belonging to Indians is deposited in tax havens abroad. Largest depositors in Swiss banks are also reported to be Indians,” CBI Director A.P. Singh said in an address at the opening of the first Interpol Global Program on Anti-corruption and Asset Recovery. He said getting information about such illegal transactions is a time-consuming process as investigators have to peel each layer by sending judicial requests to the country where such deposits have been made.
“Fifty-three percent of the countries said to be least corrupt by the Transparency International Index are offshore tax havens, where most of the corrupt money goes. The tax havens include New Zealand, which is ranked as the least corrupt country, Singapore ranked number five and Switzerland number seven,” Singh said.
He said there is a lack of political will in the leading tax haven states to part with information because they are aware of the extent to which their economies have become “geared to this flow of illegal capitals from the poorer countries.”
The CBI director said tracing, freezing, confiscation and repatriation of stolen assets is a legal challenge, a complex process which requires expertise and political will.
“Managing the asset recovery investigation is complex, time-consuming, costly and most importantly requires expertise and political will. There are many obstacles to asset recovery. Not only is it a specialized legal process filled with delays and uncertainty, but there are also language barriers and a lack of trust when working with other countries,” Singh said.
Singh cited World Bank estimates to say cross border flow of money from criminal activities and tax evasion is around $1.5 trillion, of which $40 billion is bribes paid to government servants in developing countries.