Serious Fraud Investigation Office

  • Category
    Polity & Governance
  • Published
    7th Feb, 2019

Context

  • In a bid to prevent big economic offenders like Vijay Mallya and Nirav Modi from fleeing the country, the government has empowered PSU banks to request Lookout Circulars (LOCs) against wilful defaulters and fraudsters.
  • The Home Ministry has also authorised the Serious Fraud Investigation Office (SFIO), a statutory corporate fraud investigation agency, to request LOCs if it feels the suspect may escape from India.

About

Serious Fraud Investigation Office

  • It is not a statutory body, as it was established through an executive resolution, which inter alia stated the responsibilities and functions of the SFIO.
  • It is under the ministry of Corporate Affairs.
  • The SFIO makes investigations under the provisions of the Companies Act, 1956 and also forwards the investigated reports on violations of the provisions of other acts to the concerned agencies for prosecution/appropriate action.
  • The SFIO is a multi-disciplinary organisation consisting of experts in the field of accountancy, forensic auditing, law, information technology, investigation, company law, capital market and taxation for detecting and prosecuting or recommending for prosecution white collar crimes/frauds.
  • The SFIO normally take up only such cases for investigation, which are characterized by:
    • complexity and having inter-departmental and multi- disciplinary ramifications;
    • substantial involvement of public interest to be judged by size, either in terms of monetary;
    • the possibility of investigation leading to or contributing towards a clear improvement in systems, laws or procedures.
  • SFIO may also take up cases on its own, it investigates serious cases of fraud received from Department of Company Affairs.
  • Whether an investigation should be taken up or not, is decided by the Director SFIO, who will be expected to record the reasons in writing. This decision is further subject to review by a coordination committee.
  • It was set up in 2003, on the recommendation of Naresh Chandra Committee, and in the backdrop of stock market scams resulting in huge financial loss to the public.
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