M'shtra generates maximum suspicious transaction reports

Maharashtra is followed by Delhi in generating suspicious transaction reports (STRs), according to a report prepared by the Financial Intelligence Unit (FIU), the national agency for receiving, analysing and disseminating information relating to doubtful financial transactions.

This is the first time FIU has released its report on analysis of STRs.
Maharashtra leads the pack among all states and Union Territories and accounted for an overall share of 29 per cent of such reports, followed by Delhi at 12.1 per cent, for 2006-2010 period.

The overall percentage of other states, which collected and dispatched STRs to the national FIU is as follows: West Bengal (7.3 per cent), Gujarat (6 per cent), Uttar Pradesh (6 per cent), Tamil Nadu (5.7 per cent), Punjab (5.1 per cent), Karnataka (4.7 per cent), Andhra Pradesh (4.4 per cent) and Haryana (3.5 per cent).

"Maharashtra, the financial capital of India, has a dominant share in STRs from banking sector (24 per cent), which is in line with its share in the account balance (25.4 per cent)," the FIU said in its latest report for 2006-2010 period.

The state also leads the chart for the maximum number of STRs in the insurance and mutual funds sector with 27.3 per cent and 55.5 per cent, respectively during the same period. The national capital maintained second position in all the sectors.

"Maharashtra leads the overall tally of generating suspicious reports by the virtue of its burgeoning businesses and financial transactions every day. The STR regime, however, still needs to be strengthened in all states including Maharashtra," a senior Finance Ministry official said.

All these reports are under various stages of investigation by enforcement and intelligence agencies. All STRs do not actually pertain to a criminal activity or illegal transaction. STRs are sent to FIU based on certain parameters which need to be further verified by concerned probe agencies, the official said.

Maharashtra maintained a steady tally of being a topper over the last five years with 41.6 per cent (2006-07), 38.5 per cent (2007-08), 30.6 per cent (2008-09) and 24.3 per cent (2009-10).

Delhi had the corresponding figures of 9.2 per cent, 11 per cent, 11.4 per cent and 13 per cent

"Delhi has a relatively smaller share in STRs from the insurance sector (5.1 per cent) as compared to its share of STRs from the banking sector (13.1 per cent) while it has a relatively smaller share from the mutual fund sector (4.9 per cent) as compared banking sector," the report said.

The other states which figure in the STRs report are Kerala (3 per cent), Madhya Pradesh (1.9 per cent), Rajasthan (1.9 per cent), Chandigarh (1.2 per cent), Bihar (1.1 per cent) and Chhattisgarh (1.1 per cent).

An STR relates to a transaction which gives rise to suspicion that it may involve proceeds of an offense specified under the Prevention of Money Laundering Act (PMLA) or appears to be made in circumstances of unusual or unjustified complexity or appears to have no economic rationale or bona fide purpose or gives rise to a reasonable ground of suspicion that it may involve financing of terrorism.

The FIU has received more than 17,000 STRs since 2006 when the government made it mandatory for financial institutions to generate STRs and send to them to the apex body which comes under the Union Finance Ministry. It has intelligence and enforcement agencies like the CBI, DRI, Intelligence Bureau, Enforcement Directorate and the Income Tax investigations department as its clients for such reports.

The FIU received a total of 817 STRs in 2006-07, 1,916 in 2007-08, 4,409 in 2008-09 and 10,067 in 2009-10.