Under the provisions of the Prevention of Money Laundering Act, 2002 and the rules framed there under, it is the responsibility of the banks and other financial institutions to detect suspicious transactions and report such transactions to the Financial Intelligence Unit-India (FIU-IND) under the Ministry of Finance. FIU-IND is responsible for receiving and analysing such Suspicious Transaction Reports (STRs) and disseminating information to relevant intelligence and law enforcement agencies. FIU-IND has established an information technology based mechanism for online filing Suspicious Transactions Reports (STRs) and other statutory reports and for online dissemination of the information to the intelligence and law enforcement agencies.

The STRs received by FIU-IND from the banks and other financial institutions are disseminated by it to various intelligence and law enforcement agencies including agencies administering direct and indirect taxes for taking further action. However, information disseminated by FIU-IND may or may not lead to detection of evasion of direct and indirect taxes. Moreover separate data with regard to evasion of direct and indirect taxes detected by various enforcement agencies on the basis of information shared by FIU-IND is not maintained.

Through the mechanism of Economic Intelligence Council and Regional Economic Intelligence Councils, various law enforcement agencies share information and coordinate action relating to various economic offences, including tax evasion.

This was stated by Minister of State for Finance, Shri J.D.Seelam in written reply to a question in Lok Sabha today.

Suspicious transaction reporting: electronic STR filing aids intelligence sharing but may not always detect tax evasion. Under the Prevention of Money Laundering Act, banks and financial institutions must report suspicious transactions to the financial intelligence authority, which uses an electronic STR filing and analysis system and disseminates analysed information to intelligence and law enforcement agencies. Disseminated information may not always produce tax-evasion detections, and no separate record is kept by the authority of tax evasion outcomes resulting from its disclosures. Interagency coordination occurs via Economic Intelligence Council mechanisms.