Box Office Collection and Money Laundering in Indian Cinema

The phrase “box office” may be dated back to the early Elizabethan era. When the general people used to attend to theatres to see plays, they were given seats on the ground level, commonly known as the ‘pit.’ Private boxes on the balcony were available for the wealthy class. Tickets for these boxes were sold at the box office, which was located near the entrance of the theatre. In this article we will discuss about Box Office Collection and Money Laundering.

Key Abstract

In today’s world, the phrase “box office” has two distinct meanings. First, it refers to the ticket office where movie tickets are sold to the general audience. Second, the phrase is widely used as a synonym to estimate the amount of income made by ticket sales, notably in the film business.

Furthermore, the cost of these tickets (of ‘boxes’) was higher, and most ‘boxes’ were booked/reserved in advance by a single family. The ‘boxes’ would provide a large amount of the money for films and theatre. This is still the case today, since the majority of the money collected by a film comes from box office ticket sales, which is why the earnings or revenues produced by any film after its release are referred to as the box-office collections of that specific picture.

Many instances have seen where Box Office has been indulged in the practice of Money Laundering. Let us take an insight into what actually the money laundering is?

Box Office Collection and Money Laundering

We all enjoy watching good movies in theatres, and judging by the reviews and word of mouth publicity, so far so good. However, since time immemorial to the present, we have been hearing about select blockbuster movies earning anywhere from 350 crores to 1000 crores on a budget ranging from 200 crores to 500 crores. But, as a professional firm Legal Window, used to always believe that the producer of the movie tends to boost the Production cost and Revenue earned by the movie for an altogether unrelated reason, which might be a clear instance of money laundering either solo or with a group of Investors.

The Practise of Money Laundering

The practise of money laundering involves three steps which include:

• Placement
• Layering
• Integration

Let us discuss them in detail.

Placement

The first phase is known as placement, and it is the actual transfer of cash or monetary fund’s obtained via legal or illegal operations into a less suspect form. This step is frequently as simple as taking paper currency and depositing it in an ordinary bank account or obtaining a loan at least on paper from a foreign source who has no interest whatsoever in the film making except for some commission on the deal and parting his name for the venture; alternatively, he could be paid through Hawala had he given the loan sincerely or request to act as the Distributor/ Exhibitor and promptly announce in the media that this movie was sold at an exorbitant rate of 5 Million USD and minted Double the amount in the Box Office, asking him to remit the money through Legal Channels or have some other Out of Account Quid pro quo basis of dealings which is very common and not known to the authorities, there is no authority in India to verify the accuracy of claims of the producer in a foreign country.

Layering

Layering is the next phase. The purpose of layering is to remove unlawful proceeds from their illegal source by taking the cash and executing a sequence of financial transactions designed to disguise any audit trail or attempt to track the funds. Money launderers can layer by exaggerating overall ticket sales even if the film is a dud. Cinemas can be classed based on

• Tier 1 cities have multiplexes and single-screen theatres.
• Tier 2 Cities are the same as Tier 1.
• Tier 3 cities primarily have single-screen theatres.

We cannot rule out the idea of ripping up the tickets at the box office in both multiplexes and single-screen theatres, increasing overall collections so that Black money may be readily converted into White money and shown to be a genuine source of revenue. The money launderer will try to bring the money back to him by making it look as though it is genuine business revenues after it has been stacked and transferred to disassociate it from its original source. Even the programme may be tailored to their desired / budgeted collecting statistics.

Integration

The third phase is generally referred to as integration. If the money launderer owns a business, one method of regaining control of the “Cleaned” funds is to overvalue his assets or overstate his earnings. Money laundering is easily accomplished for the types of businesses that deal with large amounts of cash sales and keep only minimal sales records, such as having businesses in Restaurants, Shopping Complexes, Retail Stores, and Business Etc., because money from illegitimate sources can be combined with legitimate income to hide its original source with relative ease and little risk of detection.

There is no definitive indicator of when money gets laundered. Two people we know who were total strangers to the movie-making business overnight became producers in Tulu & Kannada Films, now we are getting a clearer picture because our Relatively small Tulu film industry with a new release every 2 weeks had a Golden run until the Covid-19 hit them very hard and is now showing signs of recovery.

During the 1980s, the Kannada film industry produced anywhere from 80 to 90 films per year, but now it has surpassed 200, and some movies are only produced to obtain the censor certificate in order to claim the subsidy amount ranging from Rs 10.00 Lakhs to 18.75 Lakhs Per Film, from the Government of Karnataka, which is more than the production cost of the movies, thereby making a profit, there is an organised syndicate which was caught and investigations conducted by the committee some

Endnote

The practice of money laundering and Box Office Collection seems to be inseparable as many instances have been showcased in the past times, that there is something un-digestible something out there while taking the box office numbers with a grain of salt and enjoy the film. Let us at least be delighted and close with the words of actress Vidya Balan from her National Award-winning film The Dirty Picture, “Entertainment, Entertainment, and Entertainment.”