How Bollywood Is Used For Money Laundering?

How movies are used for money laundering?

The modus operandi is very simple. 

Let’s say a movie rights is sold to a distributor in western Mumbai for 50 crores. 

Let’s assume this distributor has a contact in 100 multiplex theaters in Mumbai where he can release his film. 

Now to buy the rights distributor needs 50 crores. Four people with black money pool in 10 crores each to raise 40 crores and remaining 10 crores is given by the distributor himself. This is all white money paid by check. 

Movie is released in 100 multiplexes simultaneously. They may collectively earn 100 crores in next two weeks. This is the real collection. But most of this amount is in cash and there is no money trail with bank transactions. 

Now here the underworld and black money owners play a trick. They ask the multiplex owners to inflate the collection and declare collection of 200 crores instead of real 100 crores. They give 100 crores in cash (20 crores each in cash) to the make total collection of 200 crores. This is all cash money and that is why there is no bank transactions to confirm. 

Now the collection is shown as 200 crores. 

Out of which they show expenses of 80 crores using false receipts. They show all this expenses were paid using checks hence it is a legitimate traceable business expense. All these payments are made to the dummy companies, which are, in reality owned by the underworld or same black money owners. This is how money is officially routed back to them using official channels. 

Basically underworld and black money users use dummy shell companies to launder the black money. The amounts paid to these companies are small hence no one can trace them. 

Now, after expenses, the net income for the distributor is 120 crores, out of which 50 crore is seed money, which means profit is only 70 crores. They pay tax of 10 crores on 70 crores to the government and rest all money is now white. 

Each investor who had put 10 crores of white money plus 20 crores of black money. On this investment, now gets back 22 crores of direct white money and 20 crores from the shell companies where fasle expenses were shown. They get back 42 crores of white money on the investment of 30 crore money. 

This is how black money is turned into white money. 

That is the reason why Salman Khan, Shaharukh Khan movies show collection of 400-500 crores. If you really check how much was the real collection from the theaters, you will find not more than 100-125 crores of actual collection. Rest all was black money. 

Kishor Katti