The Government has guidelines/norms in place to prevent entry of black money in stock market/share trading.

Securities and Exchange Board of India (SEBI) in accordance with the requirements of the Prevention of Money-laundering Act, 2002 and Rules made thereunder has put in place a framework to prevent entry of black money in stock market/share trading. As part of these requirements, SEBI has put in place a framework that is required to be complied by all SEBI registered intermediaries.

SEBI, while conducting preliminary inquiries, have come out with interim directions that the following entities/companies acting in concert with each other have misused the stock exchange system to generate bogus Long Term Capital Gains (LTCG) which is tax exempt.

•  Moryo Industries Limitd

•  First Financial Services Limited

•  Radford Global Limited

•  Kamalakshi Finance Corporation Limited

•  Mishka Finance and Trading Limited

•  Pine Animation Limited

•  Eco Friendly Food Processing Park Limited; Esteem Bio Organic Food Processing limited; Channel Nine Entertainment Limited and HPC Biosciences Limited.

This was stated by Shri Jayant Sinha, Minister of State in the Ministry of Finance in written reply to a question in Rajya Sabha today.

Prevention of Black Money in Securities: SEBI interim directions identify misuse of trading to generate exempt long term capital gains. SEBI's anti money laundering framework under the Prevention of Money laundering Act requires all SEBI registered intermediaries to prevent entry of illicit funds into securities trading; preliminary inquiries resulted in interim directions finding multiple companies acting in concert to misuse the stock exchange system to generate bogus Long Term Capital Gains (LTCG) claimed as tax exempt.