Compensatory payment is the nickname given to black money that is injected to firms that operate on foreign lands. Usually, the financial details of such companies are hidden from relevant authorities.
Injected funds are facilitated through agents. While the Foreign Exchange Regulation Act (FERA) was enough to deal with such funds, after globalisation, the law was diluted and Foreign Exchange Management Act (FEMA) came into existence. There are provisions under this rule to punish those who make black money from businesses outside the nation.
Normally, black money is unearthed by the Enforcement Directorate and the Financial Investigation Unit. They normally monitor the accounts of those who commit high-value transactions with clients in foreign nations. They will take action if needed. Comparatively, FEMA is much softer that FERA.
One misconception is that dodged income tax is black money. Dodging tax is a relatively smaller crime compared to other financial crimes, which can touch humongous proportions and involve the transfer of crores of rupees outside established financial systems. While stashing money in Indian banks would leave a track, stacking them in foreign banks would help to clear the trail. If laws are improved, black money too can be controlled. However, there are loopholes in the law that can delay processes and sometimes legal procedures can extend to 20 years or more before assets of a criminal is attached by authorities. If laws are tightened and coordination increased between various agencies, then black money can be controlled.