One must be aware that, Central Bureau of Investigation (CBI) has registered cases against multiple companies and their officials for bank frauds. Even the government has now asked public sector banks to probe potential frauds in all bad loans above Rs 50 crore. All this might lead to increased scrutiny by banks, and, in turn, by authorities such as the CBI and Enforcement Directorate (ED) among others.
Through the Finance Bill, 2018, the government amended the Prevention of Money Laundering Act, 2002 (PMLA). The handling of proceeds from corporate frauds will now be a money- laundering offence. As the PMLA gives ED the power to attach and even confiscate property determined to be proceeds of crime, the amendment will help authorities to prevent the scattering of proceeds from corporate frauds. In such times, it is critical for directors and officials of companies to now maintain high vigil.