A day after the arrest of K Michael, an official of the Reserve Bank of India (RBI), in Bengaluru for trying to exchange Rs 1.50 crore in old notes illegally, the CBI, in its investigation found that he along with his associates was involved in the conversion of black money for a commission of 30 per cent.
"Michael was sent to the currency chest in Kollegal to remit new currency notes after the announcement of demonetisation. He allegedly joined hands with Parashivamurthy and others to convert money benefiting 13 parties for a 30 per cent commission," Times of India quoted RBI officers in its report as saying.
Michael serves as a senior special assistant in the Reserve Bank of India. The official has confessed to wrongdoing before the CBI during initial investigations, sources said. He has also informed the probe agency that he was exchanging currency worth Rs 6 lakh for a friend.
"The agency has arrested an RBI official from Bengaluru for helping convert banned currency notes," a CBI official told PTI here, adding the arrest was made last week.
"Two other private persons have also been arrested," the official said.
The RBI official was involved in a case where he tried to exchange Rs 1.50 crore of untaxed money, the official added.
Commenting on the arrest, RBI deputy governor SS Mundra said the arrested official was "junior functionary" of the central bank who has since been suspended.
"There has been media report of one of RBI staff at Bengaluru as well, let me clarify it was a junior functionary of RBI. The concerned employee has been suspended, we have instituted investigation. Action will be taken once details are known," Mundra said.
While further probe is on, the development comes in the series of arrests following the November 8 decision by the government to demonetize high-value currency notes. The arrests have involved bank officials and hawala operators on charges of money laundering and illegal exchange of currency.
Banks have been at the receiving end of the crackdown by the government with many bank officials under the scanner for involvement in helping hoarders get their currency exchanged. The move also comes as the cash crunch refuses to abate the unending queues at banks, with the latter complaining of short supply of cash.
The connivance of some bank officials cannot be ruled out completely as there have been several reports from across the country regarding arrests with new currency notes. Earlier today, the Enforcement Directorate arrested seven people and seized Rs 93 lakh in new currency from them last night in Karnataka.
One of the seven people is reportedly the relative of a government official. The seven were allegedly middlemen in a laundering transaction.
ED officials said the seven people were arrested under provisions of the Prevention of Money Laundering Act . The seized money was in Rs 2,000 notes. The ED unearthed this scam by having its officials pose as 'customers' looking to get old currency changed illegally, and after paying a commission as bribe to the alleged middlemen.
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