Authorities in India have intensified their crackdown on suspected violations of foreign exchange laws, with the Directorate of Enforcement (ED) launching coordinated search operations in Phagwara, Punjab, on November 14, 2025. The searches targeted four premises connected to Opal Engineering Corporation (OEC), a company engaged in exporting engineering goods. The move, initiated under the Foreign Exchange Management Act (FEMA), 1999, highlights growing scrutiny on export-related payments and the use of third-party remittance channels in high-risk international trade corridors.
According to statements from the ED’s Jalandhar Zonal Office, the investigation was triggered by reports of irregularities in the way OEC handled its export proceeds. Officials allege that instead of following the standard procedures mandated by the Reserve Bank of India (RBI) and FEMA, OEC routed payments through unrelated third parties and diverted funds into personal bank accounts. “The ED investigation revealed that Opal Engineering Corporation exported goods to countries such as Syria, Iran, Turkey, and Colombia. However, the export proceeds were not realised as per the guidelines prescribed under FEMA and RBI Master Circulars,” a senior ED official told the press, as reported by multiple outlets.
The agency’s preliminary findings suggest that OEC shipped products to destinations including Syria, Iran, Turkey, and Colombia—regions often flagged by regulators as high-risk for compliance breaches. Instead of receiving payments directly from buyers, OEC allegedly adjusted export proceeds against remittances sent by unrelated firms or individuals based in different countries. The funds, investigators say, were sometimes funneled into personal bank accounts rather than the company’s official ledgers.
Crucially, ED officials stated there was no evidence of tri-partite agreements or any supporting documentation that would justify these third-party payment adjustments. “The investigation found no tripartite agreements or other documentary proof to justify these adjustment entries from unrelated parties,” the official added, underscoring the lack of transparency in the company’s financial dealings. The absence of such records, according to enforcement authorities, points to potential attempts to obscure the true origins and destinations of the funds—a red flag for possible money laundering or hawala-type activity.
The probe also uncovered that OEC used a fake Customs email ID to fabricate a veneer of legitimacy for several disputed transactions. Investigators believe this digital sleight-of-hand was intended to create a false sense of compliance and authenticity. “The firm reportedly used a fake Customs email address to legitimise these transactions,” the ED official confirmed, noting that this tactic is now a central focus of the ongoing case.
Perhaps even more concerning to authorities, several export deals were settled in cash—both within India and abroad. Such practices are strictly prohibited under cross-border trade and foreign exchange regulations. ED officials emphasized that these cash settlements violate established norms and further complicate efforts to trace the movement of funds. The possibility of these transactions being linked to broader illicit networks, including hawala operators, cannot be ruled out at this stage, investigators say.
The coordinated search operations yielded significant physical evidence. The ED teams recovered ₹22 lakh in Indian currency from the targeted premises, along with a trove of incriminating documents and electronic devices. These materials are now being scrutinized to map out payment trails, identify all beneficiaries, and determine whether the irregularities are part of a more extensive network involving other entities or individuals. “During the searches, Indian currency amounting to Rs 22 lakh, along with incriminating documents and electronic evidence, was recovered and seized,” the agency confirmed in its official statement.
Officials believe the seizures have provided “significant leads” regarding the handling of export proceeds, the role of third-party remitters, and the authenticity of documents submitted during the transactions. The ED has indicated that the investigation is far from over, with further action—including additional summons and the potential attachment of assets—likely as the probe unfolds. “Further investigation into the matter is ongoing,” the agency stated, signaling that the crackdown on FEMA violations is set to intensify in the coming weeks.
This case is not an isolated incident. In recent years, Indian enforcement agencies have ramped up their scrutiny of exporters operating in high-risk trade corridors and those engaging in transactions involving third-party payments. The use of unrelated intermediaries, the diversion of funds into personal accounts, and the employment of fake digital identities have all emerged as common tactics among firms seeking to evade regulatory oversight. The RBI, for its part, has issued repeated warnings and circulars urging exporters to adhere strictly to established procedures for realizing export proceeds and to maintain comprehensive documentation for all transactions.
Industry observers note that while the vast majority of exporters comply with India’s stringent foreign exchange rules, loopholes and lax oversight in certain sectors have allowed some companies to exploit the system. The growing sophistication of digital fraud and the proliferation of cross-border cash settlements have made enforcement more challenging. “The absence of proper records, ED said, suggests an attempt to conceal the true nature of the financial flows,” according to official documentation reviewed by the press.
Legal experts point out that violations of FEMA can result in hefty penalties, asset seizures, and even criminal prosecution in severe cases. The law, enacted in 1999, was designed to facilitate external trade while ensuring the orderly development and maintenance of India’s foreign exchange market. However, it also grants broad powers to enforcement agencies to investigate, search, and seize assets in cases of suspected non-compliance.
For OEC, the road ahead looks uncertain. With investigators poring over seized documents and digital evidence, the company faces mounting questions about its business practices and financial integrity. The case has also sent a clear signal to other exporters: regulatory agencies are watching closely, and attempts to bypass established norms—whether through fake emails, third-party payments, or cash settlements—will not go unnoticed.
As the investigation continues, all eyes are on the ED’s next moves. Will more companies come under the scanner? Could this probe uncover a wider network of illicit trade practices? For now, the message from enforcement authorities is unmistakable: compliance with foreign exchange laws is not optional, and those who flout the rules risk facing the full force of the law.
