- Sanchita Bhattacharya, Research Associate, Institute for Conflict Management published in South Asia Intelligence Review (SAIR), Oct 12, 2015
On September 24, 2015, a fake lottery scam, with suspected hawala (illegal money transactions) linkages, was unearthed in West Bengal. The Central Board of Direct Taxes (CBDT), based on inputs from the Intelligence Bureau (IB), exposed the racket and seized INR 200 million in raids. As many as nine locations in Kolkata and one in Siliguri of Darjeeling District were raided. According to reports available, of these, as many as 20 sacks of notes were seized from two locations in Kolkata and one in Siliguri. An unnamed senior intelligence official disclosed, "It is a lottery-hawala-money laundering racket. Money seized was being transferred by hawala on Thursday [September 24] to Dubai. We are looking at further nodes there".
Reports on September 27, 2015, indicated that IB alerted the Union Ministry of Home Affairs (UMHA) about numerous bank accounts, involved in either hawala or fake lottery schemes running across India, possibly being operated by Dawood Ibrahim. With inputs from the Research and Analysis Wing (R&AW), IB submitted a detailed report over the scam to the UMHA, informing the Centre that a majority of the bank accounts were in Government banks, with the State Bank of India topping the list. 30 per cent of such suspicious bank accounts were operational in Bihar, followed by 18 per cent in West Bengal, 13.5 per cent in Uttar Pradesh and 11 per cent in Madhya Pradesh. More importantly, the cases investigated by the Enforcement Directorate (ED) found that the estimated size of the scam thus far was INR 41.93 billion. The report further noted that while 1,175 Pakistani phone numbers were under surveillance, 305 Indian phone numbers were known to be in constant touch with these Pakistani contacts.
Money laundering channels, fake lottery scams, the circulation of Fake Indian Currency Notes (FICNs), narco-trafficking, etc., have been integral to the funding of Islamist terrorism in India. Pakistani sponsored modules have long sought to destabilise the India through these instrumentalities. These modules receive funding and instructions from Pakistani intelligence agencies, most prominently the Inter-Services Intelligence (ISI), and also use launch pads in UAE and Bangladesh.
Hawala channels have been the dominant medium of transferring funds to Kashmiri separatist organisations. According to a September 13, 2015, report, the National Investigation Agency (NIA) identified JKART (Jammu and Kashmir Affectees Relief Trust), with its head office in Rawalpindi (Pakistan) and branch offices in Islamabad and Muzaffarabad (Pakistan occupied Kashmir), sends money into India through the hawala route as well as banking channels, and these funds are distributed through conduits not only in Jammu and Kashmir (J&K) but also in Delhi and other parts of the country.
On August 22, 2015, ED had issued fresh summons to Kashmiri separatist leader Shabir Shah, Chairman of the Democratic Freedom Party of Jammu and Kashmir, for questioning in connection with a decade-old case of terror financing through the hawala channel. This is the third attempt by the agency to serve summons on Shah in a case where Delhi Police's Special Cell arrested Mohammed Aslam Wani on August 26, 2005, along with INR 6.3 million, which he had received through hawala channels from the Middle East, and a large amount of ammunition. During questioning, Wani had claimed before Police that, out of the INR 6.3 million, INR five million was to be delivered to Shah and INR one million to Abu Baqar, the Jaish-e-Mohammad (JeM) 'area commander' in Srinagar, while the rest of the money was to be his (Wani's) commission. Wani, an alleged hawala dealer, had also claimed that he had passed on INR 22.5 million to Shah and his kin in several installments over the preceding year. According to sources, Shah had asked Wani to channel hawala money to him from Delhi, for which he was to be paid three per cent as commission.
Similarly, in July 2015, ED filed a charge sheet against Firdous Ahmad Shah, a member of Syed Ali Geelani's All Parties Hurriyat Conference, and Yar Mohammed Khan, for allegedly receiving money from Europe for use in terror financing. ED had alleged that the fund was received from Italy through Western Union Money Transfer and this money was used for unlawful activities relating to the financing of terror.
Meanwhile, Bangladesh has become a market for dumping FICNs. Two big seizures of FICNs within Bangladesh in the month of September 2015, including INR 27.1 million from a consignment arriving at the Chittagong Port from Dubai on September 20 and INR 12.8 million from a Bangladeshi flying into Dhaka from Dubai on September 22, have deepened India's suspicion that Pakistani agents are producing FICNs in bulk at facilities in the Gulf, and shipping the fake currency into South Asian ports and airports, for entry into India.
According to Indian intelligence sources, the total amount of FICNs recovered from Bangladesh since January 2014 is over INR 230 million. Most FICN hauls were from flights arriving into Bangladesh, either directly from Pakistan or from Dubai, Colombo (Sri Lanka), Doha and Turkey. Indeed, October 1, 2015, reports indicate that UMHA had warned the West Bengal and Assam State Governments to maintain strict vigil across the border.
FICNs circulation remains a major challenge in India. The Rajya Sabha (Upper House of Indian Parliament) was informed on August 4, 2015, by Union Minister of State for Finance Jayant Sinha, that more than 1.55 million notes were recovered in 2012, 2013 and 2014, with a face value of about INR 775 million. The porous Indo-Bangla border has made the Malda District in West Bengal the epicenter for FICN smuggling. According to a Malda District Police report, FICNs with a face value of INR 14.3 million were seized in 2013; rising to INR 15 million in 2014; and INR 19.7 million in the current year (till July, 2015). The source of most of these notes is Pakistan, and the quality is so good that it can hardly be distinguished from original notes.
FICN rackets have taken the magnitude of a cottage industry at places like Mohabbatpur, Chorianantapur and Sasani in Malda District; Gopalnagar and Khoribona in Murshidabad District; Misutola and Dangipara in Uttar Dinajpur District (all in West Bengal), which are easily accessible to Bangladesh's Chapai Nababgunj District, notorious for being a fake currency hub, as well as Nepal. Malda Superintendent of Police (SP) Prasun Banerjee, according to a September 14, 2015, report, observed, "Also, people here work as labourers in Rajasthan, Punjab, Delhi and Assam and they carry the notes with them there." NIA had stated that 80 per cent FICNs are sneaked into the country through the 172 kilometer porous border along Malda. According to NIA, Malda has become the locus of a range of criminal activities with links to the Pakistan's ISI-backed network of terrorism.
West Bengal is not alone among Indian states affected by FICNs circulation. According to the National Crime Records Bureau (NCRB), of the 30,354,604 FICNs seized across the country in 2014, 8,747,820 were recovered from Gujarat. Chhattisgarh followed close at heel with the seizure of 7,386,900 fake notes, while Andhra Pradesh, Punjab and Haryana saw recoveries of 5,437,600, 3,249,000 and 1,696,850 counterfeit notes, respectively. Apart from the road and railway routes, the air route via Bangladesh, Nepal, Sri Lanka, Malaysia, Singapore, Thailand and the UAE, as also China and Holland, have been used for smuggling in fake notes.
According to an April 10, 2015, report, from 2006 onwards INR 148.5 million have been recovered by the Police and NIA in 15 states (names not available). Of these, NIA seized INR 36.6 million in terror funds in 11 cases investigated by it since its inception in December 2008. As many as 101 persons are accused in these cases. Jammu and Kashmir Police ranks second only to NIA in seizures. The State has seized INR 29.3 million in 80 terror financing cases since 2006, in which 190 persons are accused. Manipur, despite its small size, reported terror fund seizures worth INR 21.1 million in 26 cases, followed by Delhi which seized INR 19.2 million in 21 cases. Madhya Pradesh accounted INR 16.4 million, and Odisha Police around INR 11.2 million in seizures of terrorist funds. Karnataka, Gujarat and Kerala registered 14, three and one terror financing cases, respectively, under the Unlawful Activities [Prevention] Act (UAPA), but have not reported any seizure since 2006.
On September 9, 2015, Union Home Minister (UHM) Rajnath Singh noted that India faces a serious challenge because of drug trafficking due to its proximity to major opium-growing areas of the region, adding: "Involvement of various terrorist groups and syndicates in drug trafficking leads to threat to the national security and sovereignty of states by the way of narco-terrorism." Significantly, a dossier on Dawood Ibrahim, reportedly prepared by National Security Advisor Ajit Doval, discloses that Dawood's cash comes from the drug trade, fake currency, realty and money laundering. Agencies feel once they have control over Dawood's offshore assets, "it'll break the security cordon around him..."
June 26, 2015, report stated that 110,032 tonnes of illegal narcotic substances were seized between 2011 and 2014. Moreover, as many as 64,737 drug-trafficking cases were reported during same time-frame. The Narcotics Control Bureau (NCB) data for January 2015 reveals that the four major international airports of India in Delhi, Mumbai, Chennai and Kolkata account for 94 per cent of the instances of drug smuggling and seizures.
To fight this menace of terror finance, India has taken several measures in the past. Most recently, in September 2015 the Union Government approved the introduction of seven new security features in currency notes to detect FICN. Though the measures are not yet disclosed by the agencies, they are expected to be functional in 2016. Moreover, in the same month, a team was formed, on the directions of the Department of Revenue under the Ministry of Finance, to conduct a ‘national risk assessment’ on the threat posed to the financial sector by money-laundering and terror financing.
Pakistan remains relentless in its effort to destabilise India through terrorism, creating resources for its proxy war through the circulation of FICN, drugs and a range of criminal enterprises, even as monies are directly provided to terrorist networks through hawala and the banking system. Various ‘peace building’ measures that New Delhi has supported, including the easier movement of populations across the Line of Control and International Border in J&K, improved trade relations and greater ‘people to people’ contacts, have only facilitated some of these processes, and have encouraged Pakistan to believe that it can continue with its malfeasance without prohibitive, or even significant, costs. After decades of Pakistan backed terrorism and subversion, India is yet to formulate a coherent strategy of response. Fire-fighting initiatives, seeking to contain or suppress the visible manifestations of Pakistan’s proxy war can only provide limited relief, but fail consistently to address the source.
