Official Text
“Establishing or using corporate entities without genuine business activity to camouflage ownership, transact fictitiously, or launder illicit funds.”
Legal Analysis
Elements to Prove:
- Creation or use of non-genuine entities.
- Fictitious or no underlying economic activity.
- Intent to conceal or launder proceeds.
Potential Defenses:
- Genuine business purpose.
- Regulatory compliance and transparency.
- No fictitious transactions.
Practical Examples
What Constitutes the Offense:
Circular trading, fake vendor networks, routing invoices through non-operational entities.
What Doesn't Constitute:
Dormant company maintained with statutory compliance and no fraudulent use.
Punishment
Imprisonment up to 7 years, and Fine