- 18-Apr-2025
- Education Law
Money laundering and tax fraud are closely connected, as criminals use illegal financial networks to hide undeclared income. The government employs advanced financial tracking systems, regulatory frameworks, and international cooperation to identify and prevent such activities.
The FIU-IND tracks suspicious financial transactions reported by banks, payment gateways, and financial institutions.
It analyzes large cash deposits, unaccounted wealth transfers, and offshore transactions to detect tax fraud and money laundering.
The government links PAN (Permanent Account Number), Aadhaar, and bank accounts to track high-value financial transactions.
This helps detect income misreporting, tax evasion, and black money circulation.
Under the Prevention of Money Laundering Act (PMLA), 2002, authorities track illegal fund movements through shell companies, benami transactions, and fake accounts.
The Enforcement Directorate (ED) investigates large-scale money laundering cases related to tax fraud.
The Goods and Services Tax Network (GSTN) uses AI-driven analytics to detect fake invoices, fraudulent Input Tax Credit (ITC) claims, and tax evasion.
The Income Tax Department analyzes tax returns, business transactions, and cash flow patterns to identify tax fraud.
Through DTAA (Double Taxation Avoidance Agreements) and OECD’s Automatic Exchange of Information (AEOI), India receives financial data from foreign tax agencies.
This helps track hidden offshore accounts, undisclosed foreign properties, and illegal fund transfers.
The ED and FIU-IND monitor hawala transactions (illegal money transfers without formal banking channels) used for money laundering.
The government is increasing surveillance on cryptocurrency exchanges to track illegal fund movements linked to tax evasion.
Authorities use AI-based fraud detection systems to identify unusual transaction patterns, shell companies, and sudden spikes in wealth.
Big data analytics is used to cross-check tax filings with actual financial activity.
The government identifies benami (proxy-owned) properties linked to money laundering through real estate transaction tracking.
Assets found under benami ownership are seized and confiscated by the authorities.
A business owner underreports income but deposits large amounts of cash into multiple bank accounts. Here's how the government tracks it:
Discover clear and detailed answers to common questions about Taxation Law. Learn about procedures and more in straightforward language.
