MONEY LAUNDERING - The Game of Power of Attorney (POA)

MONEY LAUNDERING - The Game of Power of Attorney (POA)

Broker - Registered Trading Member of Indian Stock Exchanges. They make lucrative offer to their client and allure them to take loan for the purpose of buying share and stock. They would tell the trader that they have a tie up with the bank, and would be able to get them a loan faster, at lower interest rate and without any collateral security. This loan can only be done through them, and if the trader approached the bank he would not get the same offer. With this loan trader would be able to increase it transactions and make more profit.

Broker would tell the client that for this the broker would need the power of attorney of the trader’s new bank account as it is a rule of the bank, and would only then enable them to get the loan at lowered interest rates and without any collateral security. And this would also speed up the transaction from trader’s bank account to broker’s account and from broker’s account to exchange.

Now when the client agrees to open a new bank account and to give the power of attorney to the broker, only to operate his new bank account, the broker would give him a bunch of documents to sign along with new bank account form. The broker would tell the client that the bank account would be in the same name as their database and would be opened by their head office as they have a tie up with the bank and it is one of their company policies, this would also speed up the process for the trader, and he need not give all details and just sign on the documents as they would do all the necessary formalities after client identity verification. Now the broker would fill in the new bank account form the details of his subsidiary group company or sister concern, and this account would now be used for money laundering. The account would only be used for online fund transfers through automated software.

The client or also called trader in above paragraph’s is innocent and unknown from the transactions happening through this account, as all the bank statements and transaction details are being sent to the address the broker introduced in the new bank account opening form, and this is why the account is not actually the traders account. In this scheme neither the broker nor the company or subsidiary group company and sister concern can be held responsible as the account was not in their name and are not operating this account directly, but are actually using it through non legitimate means. 

There are thousands of such accounts used by the business owners to do money laundering, because such a huge number of accounts make it really hard to trace. And neither are these accounts in the name of any one individual. These accounts are called Power of Attorney (POA) accounts. The operators of these accounts are called power of attorney holders and they are India’s biggest business group and their Director, Chairman and Managing Directors. These schemes are not disclosed to employees at smaller level and are protected from anti crime and anti corruption agencies.

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