ET NEWS

Mumbai: The government will plug a gap exploited by dubious companies to illegally move large sums of foreign exchange overseas.Scammers have been tampering with certificates issued by chartered accountants using simple tools like PDF editors to dupe banks handling cross-border transfers.Bankers who fall for it are either careless or complicit. Tax authorities are now preparing to close the loophole, sources told ET.A CBDT spokesperson confirmed that changes are being introduced to prevent such misuse. Once implemented, neither can a company forge a CA's certificate nor can banks plead ignorance.The gap, long feared to have been abused by grifters and fly-by-night entities, resurfaced in a recent case where companies linked to a single mastermind used a large private sector bank to remit ₹700 crore to firms in Singapore and Hong Kong. 124277752THE PROCESS, THE GAPSThe key remittance document is Form 15CB, on which the CA enters details, applies a digital signature, and generates a unique document identification number (UDIN) - an 18-digit alphanumeric code issued by an ICAI system.Once the CA files Form 15CB online with the Income-Tax department, an acknowledgement number is generated. The CA then shares the PDF with the client, who logs into the tax portal to file Form 15CA by quoting the acknowledgement. This form is largely auto-filled, drawing data from 15CB. Finally, the PDFs are submitted to the bank to process the remittance.The loophole lies in crude forgery: falsifying the Form 15CB PDF with editing software, generating multiple certificates with the same or fake UDINs, and submitting them to banks. The fraud would be exposed immediately if a banker verified the UDIN and matched details on the ICAI portal. But if they don't - wilfully or negligently - hundreds of millions can slip out under the guise of import payments.FIXING THE FLAWThis is set to change. "A proposal is under consideration to transmit Form 15CA directly and electronically to authorised dealer banks. This will cut reliance on manual submission and strengthen compliance. Integrity measures are also being reinforced for Form 15CB. Online validation of UDIN is proposed so that authenticity can be verified instantly. Details of the authorised dealer will also be captured in the form. This will reduce mismatches and create a stronger audit trail," a CBDT spokesperson said.Banks will soon be required to mandatorily verify UDIN validity and match the amount and other details on ICAI's portal with the PDFs submitted by clients. The IBA had asked banks to do this back in 2019, but some ignored the advice."Such remittance fraud is not just a financial crime - it's a failure of verification and accountability. When forged 15CBs and fabricated UDINs can bypass controls, it shows cracks in compliance. Banks and regulators must shift from box-ticking to active verification. Real-time UDIN checks and source validation must be non-negotiable. In the digital age, documents must be verified, not assumed," said Ashish Karundia, founder of CA firm Ashish Karundia & Co.CAs, he added, must issue Form 15CB only after thorough due diligence - checking the Tax Residency Certificate, Form 10F and supporting papers. "Banks must not process remittances purely on a certificate. They must authenticate the UDIN, confirm the CA's identity, and verify documentation. Lapses can trigger PMLA scrutiny. Once funds flow out, reversal is rare," Karundia said.Indeed, the Enforcement Directorate invoked the Prevention of Money Laundering Act in one such case.According to Nemin Shah, founder and director of EQX Business Consultancy Pvt Ltd, "Over time, Form 15CB has gone from hard copy to digital to prevent misuse. Every form can now be verified on ICAI's portal via UDIN. If a banker checks a Form 15CB, the CA gets an email. This has reduced misuse, but the risk remains if bankers are complicit."

Czech billionaire Daniel Kretinsky has agreed to sell his 20% stake in Thyssenkrupp's steel unit and scrap plans for a joint venture for the business, both parties said in a joint statement, paving the way for a possible deal with Jindal Steel. The sale ends protracted talks over what could have become a German-Czech steel and energy giant, discussions that have not made any measurable progress since Kretinsky bought a fifth of Thyssenkrupp Steel Europe (TKSE) last year. Kretinsky has already given up his seat on TKSE's supervisory board, along with another senior executive of his EP Group, a company spokesperson said. Shares in Thyssenkrupp rose as much as 3% to hit their highest level in nearly six years before trading 0.7% lower at 1208 GMT. CLEAR PATH FOR TALKS WITH JINDAL STEEL It now creates momentum for Thyssenkrupp to intensify talks with India's Jindal Steel International, which last month submitted an indicative bid for all of TKSE, a volatile business its parent has sought to divest. The statement said that Kretinsky's EP Group "respects Thyssenkrupp AG's preference to concentrate on discussions with Jindal Steel International" and that it would be reimbursed for the purchase price it paid to Thyssenkrupp for the TKSE stake. While both parties have never disclosed the purchase price, people familiar with the matter have put it at around 140 million euros ($164 million). The news comes amid growing uncertainty over the future of steelmaking in Europe, as the sector contends with cheap Chinese imports, high energy costs and delays to hydrogen-based decarbonisation in one of the most polluting industries. Kretinsky's EP Group and Thyssenkrupp had the aim of eventually forming a 50/50 joint venture for TKSE, but talks have been fraught with difficulties as powerful unions have accused the Czech businessman of refusing to engage. "The management board can and must concentrate fully on the talks with Jindal," said Juergen Kerner, Thyssenkrupp's deputy supervisory board chairman and a senior member at IG Metall, Germany's biggest trade union. "In particular, details on financing must now be clarified quickly, but above all thoroughly. The employee side expects to be involved at an early stage."

U.S. employers announced fewer layoffs in September but hiring plans so far this year were the lowest since 2009, a report said on Thursday, adding to evidence of a labor market standstill as the demand and supply of workers fall because of policy and technology advances. The report from global outplacement firm Challenger, Gray & Christmas does not normally attract much attention. But together with other private data, it has become more prominent due to a U.S. government shutdown that has led to major economic releases being suspended, including the closely watched employment report for September that was due on Friday. The 15th government shutdown since 1981, which will lead to the furlough of 750,000 federal workers, has also delayed the publishing of the weekly jobless claims report, August factory orders and construction data. The trade report is also likely to be affected. Challenger, Gray & Christmas said planned job cuts dropped 37% month-on-month to 54,064 in September. Employers have so far this year announced 946,426 job cuts, the highest year-to-date since 2020. Hiring plans so far this year have totaled 204,939, the lowest year-to-date since 2009 when the economy was just emerging from the Great Recession. LABOR MARKET IS STAGNATING "Right now, we're dealing with a stagnating labor market, cost increases and a transformative new technology," said Andrew Challenger, senior vice president at Challenger, Gray & Christmas. "With rate cuts on the way, we may see some stabilizing in the fourth quarter, but other factors could keep employers planning layoffs or holding off hiring." The Federal Reserve resumed easing policy last month, cutting its benchmark overnight interest rate by 25 basis points to the 4.00%-4.25% range, to aid the labor market. Economists say lingering uncertainty from President Donald Trump's trade policy, immigration raids and the rise of artificial intelligence, have combined to reduce demand and labor supply. Nonfarm payroll gains averaged only 29,000 jobs per month in the three months to August compared to 82,000 during the same period last year. Challenger said the government accounted for the bulk of planned layoffs, with 299,755 job cuts announced so far this year, part of an unprecedented campaign by the White House to reduce the federal workforce. Trump threatened to fire more federal workers if there was a shutdown. The surge in AI is costing jobs in the technology sector, with companies in the industry announcing 107,878 layoffs so far this year. Challenger said AI was also making it difficult to land positions, particularly for entry-level engineers. Should the shutdown persist into next week, September's consumer price, retail sales, housing starts and producer inflation reports will probably not be published, impacting decision making by households, investors and policymakers.