$ 5551 Cr FEMA Violation: ED Issues Notices to Xiaomi & 3 Banks

New Delhi: Enforcement Directorate (ED) has issued show-cause notice for a FEMA violation worth $5,551 crore to Xiaomi Technology India, its CFO Sameer Rao, its former MD Manu Jain, and 3 banks. This show-cause notice is related to illegal remittances of $5555.27 crore made by the company.

The ED statement said notices were sent to CITI Bank, HSBC Bank, and Deutsche Bank AG for violating Sections 10(4) and 10(5) of FEMA by permitting international payments made under the guise of royalties. The banks allegedly did not resort to due diligence and obtained any underlying Technical Collaboration Agreement from the company.

In 2022, ED seized $5,551.27 billion worth of property belonging to the China-based Xiaomi group.

According to the ED, foreign exchange worth 5,551.27 crore has been transferred out of India by Xiaomi India in an unauthorized manner and is held outside of India on behalf of the group entity in contravention of section 4 of FEMA, 1999, and the same is liable to be seized in accordance with provisions of Section 37A of the FEMA.

After the ED investigation is over, a show cause notice is given under FEMA, and once it is resolved, the accused is obligated to pay a fine.