The Enforcement Directorate (ED) recently carried out a series of searches across five locations in Mumbai under the Foreign Exchange Management Act (FEMA). The operation targeted full-fledged money changers (FFMCs) suspected of engaging in illegal foreign currency transactions. Among the companies under investigation were Kuntilaa Forex Pvt Ltd (KFPL), Shagun Enterprises, Capital India Finance Ltd, and MDB Tours and Forex Pvt Ltd.
Evidence Worth Crores
During the raids, ED officials reportedly confiscated foreign currency valued at Rs 4.6 crore, along with Indian currency, electronic devices, and various documents connected to the suspected transactions. According to sources, the investigation was launched after unusual financial activities were detected in transactions linked to KFPL, a company whose license was revoked by the Reserve Bank of India (RBI) in October 2023 due to regulatory non-compliance. Initial findings revealed that bank accounts associated with KFPL, MDB Tours and Forex Pvt Ltd, and other entities were used for extensive cash deposits and fund transfers from various sources. The ED stated that these funds were then used by FFMCs to buy foreign currency in bulk from Capital India Finance Ltd, an AD-Category-II licensee, which was subsequently sold through unauthorized channels.
High-Value Transactions
The ED’s investigation uncovered over Rs 370 crore in cash deposits made into KFPL’s accounts over a 14-month period during 2022-23. Additionally, Capital India Finance Ltd was found to have received substantial funds from FFMCs with limited or no prior experience in handling such large transactions. Due to regulatory breaches and suspicious activity, many of these FFMCs had their licenses revoked by the RBI, as reported by the ED.
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