The Centre’s cancellation of RBI-issued notes of Rs 500 and Rs 1,000 with effect from the midnight of November 8, is likely to cripple the alleged money-laundering activities of certain hawala networks that are active in cities like Mumbai, Delhi and Kolkata among others. They specialise in legalising unaccounted cash.
The laundering is allegedly done via equity subscription at high premium by shell firms.
The Enforcement Directorate’s (ED) probes, including the one pertaining to the alleged money-laundering case against Maharashtra’s former deputy chief minister Chhagan Bhujbal and his associates, allegedly revealed the modus-operandi of Kolkata-based networks comprising chartered accountants and hawala operators, said an ED source who requested anonymity.
According to the source, such networks accepted unaccounted cash — usually comprising the high denomination notes of Rs 500 and Rs 1,000 for easy mobility — in crores from their clients then returned them back via regular banking channels to the accused. “For this, the networks created an intricate maze of shell firms that subsequently bought shares of the clients’ firms at high premium rates thereby laundering the unaccounted cash into legitimate assets,” said the ED source.
The ED had arrested Bhujbal in March in a multi-crore money-laundering case. As per the ED’s case, it was alleged that the share purchasing entities were bogus and were used to integrate unaccounted funds, said the ED source. When contacted by The Asian Age, Bhujbal’s lawyer R.B. Mokashi declined to comment on the ED’s case against his client saying, “The matter is sub-judice.”
It may be mentioned here that several Kolkata-based hawala syndicates have been under the scanner of authorities for the past few years. Last September, the Central Board of Direct Taxes had seized 20 sacks of Indian currency notes worth '20 crore in searches carried out at nine locations in the city. “The denomination of the two notes, of Rs 500 and Rs 1,000 will aid in crippling the typical modus operandi of certain hawala networks operating from Kolkata and other cities as seen in money-laundering probes,” said the ED source.
