Benami Transaction

In a typical benami deal, the real owner buys a house, land or shares in the name of a relative, employee or friend, who holds it only on paper. The reason is usually to hide unexplained income, avoid tax or keep assets away from creditors and investigators. The person in whose name the property stands is the benamidar; the person who truly owns it is the real owner. India has a dedicated law, the Benami Transactions (Prohibition) Act, which bans such holdings, allows authorities to attach and confiscate the property and sets prison terms for offenders. The law carves out a few exceptions, such as property held by a person for the benefit of a spouse or child and bought from known income. Banks meet the concept when a customer's account shows funds that clearly belong to someone else, or when property purchases do not match the buyer's income. Investigators use the concept to look past the name on a title deed to whoever funded and actually uses the property.

A senior official's relative, a retired schoolteacher, buys three plots of land for a sum far above her known income. Investigators find the official paid the money and controls the land. The plots are treated as benami property, attached by the authority and the relative is named as benamidar.