A number of trusts set up in overseas tax havens using a complex maze of entities have come under the scanner of Indian and Swiss authorities for suspected tax evasion by parking of illicit funds in Switzerland-based banks, as per notices issued to those entities.
In addition, several individuals who are suspected to have moved abroad after evading taxes back in India are also being probed and their banking details are in the process of being shared by the Swiss authorities with their Indian counterparts.
As per the notices published in Switzerland's federal gazette over the past one month, these individuals, including some businessmen, as also trusts based in Cayman Islands and companies have been asked to appoint their nominees in case they want to appeal against sharing of their banking details with India.
Trusts, especially those set up in jurisdictions like Cayman Islands, Panama and British Virgin Islands, have often been seen as routes for evading taxes.
Those named in these notices include businessman Atul Punj, Gautam Khaitan, Satish Kalra, Vinod Kumar Khanna, Dullabhbhai Kunverji Vaghela, Revaben Dullabhai Kunverji Vaghela and Balwantkumar Dullababhai Vaghela.
In some cases, the persons named in the notices are reported to have died already and their heirs have been asked to respond to the notices. The Cayman Islands-based trusts named in such notices include The P Devi Children's Trust, The P Devi Trust, The Dinod Trust and The Agarwal Family Trust.
Similar notices have also been issued in the names of Cayman-based Devi Limited and India-based Aadhi Enterprises Pvt Limited, among others.
Some of these entities are suspected to have been used by politicians to park their illicit wealth, including through instruments liked to sectors like real estate, gems and jewellery and financial services.
These notices have been issued after India's request for "administrative assistance" in respective probes into each of the case and are different from the automatic exchange of information framework that has become effective between India and Switzerland since last year. The first set of data under the automatic exchange was shared in September 2019 and would be followed by an annual exercise every September.
Some of the accounts being tackled through the 'administrative assistance', which can be tapped only after submission of prima facie evidence of wrongdoings, might have been closed before 2018, the cut-off year for the automatic exchange.
Issuance of notices is typically the first step towards sharing of information by Swiss authorities with the requesting jurisdiction under Switzerland's regulations about sharing of financial information in tax matters.
These notices do not disclose much details, besides the names and dates of birth (or date of incorporation in case of companies or trusts) of the noticees.
Some of these names had come out in the leaked lists like Panama Papers and HSBC lists and several of them at that time had denied any wrongdoing, but Indian authorities had launched their investigations soon after.
The Swiss authorities have been issuing such notices regularly to Indian residents having accounts in Switzerland-based banks on receipt of requests accompanied with prima facie evidence of financial wrongdoings, including stashing of suspected illicit funds.
More than 100 such notices have been issued in recent months, including against people already facing black money probe back in India. In case of Gautam Khaitan, an accused in the AgustaWestland chopper scam case, and Chennai-based real estate firm Aadhi Enterprises, similar notices have been issued in the past as well.
While Swiss bank accounts have been a matter of heated political debate for many years in India due to suspicion that they were being used to hoard black money, it has also been suspected that people linked to the erstwhile princely states had stashed some funds in banks in Switzerland.
The Swiss government has also been making details of dormant accounts public since 2015 to allow their claimants to submit necessary proof to get access to those funds, which included at least 10 accounts linked to Indians.
These included some accounts linked to Indian residents and nationals from the British era. However, not a single dormant account linked to an Indian has been successfully claimed in the last six years, as per the records available with the Swiss authorities.
The list included close to 2,600 dormant accounts when it was first made public in December 2015, which had around 45 million Swiss francs (over Rs 300 crore) lying unclaimed since at least 1955. There were also nearly 80 unclaimed safety deposit boxes when the list was first made public for claims from the real owners or their heirs.
More accounts are being added every year since then after they become dormant under the Swiss banking laws. The list now includes nearly 3,500 accounts.
Generally, the deadline for submitting requests is one year from the date of such dormant accounts being made public, but a larger time-frame of five years has been given for accounts that had the last customer contact in 1954 or earlier.
The claims can be submitted by the original account owner as also by his or her legal heirs. If no request is received within the deadline, or if the bank finds the claims unjustified, the bank needs to hand over the assets to the Federal Finance Administration of Switzerland, thus making all rights of former customers null and void.