India busts Chinese Hawala racket. Finds records of hawala transactions to the tune of Rs 1000 crore

Income Tax Department conducts a search on- the premises of Chinese citizens involved in hawala

The detention of a Chinese person, who alleged to have managed a fake Indian passport from Manipur is the beginning of 'picking up' on Chinese citizens living in India 'unauthorisedly' and engaged in money laundering in various parts of the country.

If senior officers of the Income Tax Commissioner are to be believed there are several banks officials hand in gloves with 'such Chinese people' in association with the local businessmen or traders to convert black money into White and transfer it to foreign accounts in a legal way.

On August 11, the IT officials raided over a dozen premises in Delhi, Gurgaon and found that more than 40 bank accounts were created in various dummy entities and entered into credits of more than Rs 1000 crores over a 'certain period.

The prime accused, in association with local individuals, opened the fake bank accounts to make hawala transactions through a series of shell entities.

The search operations revealed that  A subsidiary of Chinese company and its related concerns have taken over Rs. 100 crores bogus advances from shell entities for opening businesses of retail showrooms in India, the Income Tax Commissioner said.

Further investigation led to the seizure of incriminating documents in respect of hawala transactions and laundering of money with the active involvement of bank employees and Chartered accountants.

IT officials admitted that Bank employees and Charted Accountants were actively involved in the facilitation of hawala transactions.  It also found pieces of evidence of foreign hawala transactions involving Hongkong and US dollars.

The raids were conducted based on credible information which indicated that a few Chinese individuals and their Indian associates were involved in money laundering and hawala transactions through a series of shell entities. On the basis of this information, it conducted a search action was mounted at various premises of these Chinese entities, their close confederates and couple of bank employees.

Why Chinese Are the Main TARGET?

August 11 raids are just the beginning but not the end. Many more Chinese people living in India 'legally or illegally' and engaged in hawala transactions would be their next target.

According to traders, engaged in trading from China, most of the import from China is heavily underpriced to cut import duties. The government figure of Chinese import is much less than what it is the actual data. "Though the underpricing varies from item to item and situation to situation, however, on an average the underpricing is almost 30 % of the invoice value. This means if we are importing USD 100 million, only USD 70 million would come on government record," said a trader dealing imported Chinese items, requesting anonymity.

Under-invoicing of 30 % is an 'open secret'. Anyone who has an iota of experience of Delhi wholesale Chinese market knows about it. Now how this 30 % invoice value is paid to Chinese exporters?

There are two modus operandie.

A: Bartering of invoice values, Chinese exporters under invoice 30 %, and then he imports goods of the same value from India under-invoicing the 30 % value of exported goods. It is very complicated methods and only big players can do this.

B: The second method is simple and very common. The Indian agent of the Chinese exporters take the under invoice money in cash or kind and transfer it to China through hawala or through these shell companies in the name of services.

How hitting Chinese individuals would help?

Chinese people normally do not trust Indians and they themselves evolve secret ways of hawala transactions. Intelligence agencies even suspect that these 'black money' might be used for anti-national activities in India and funding organisations working to disrupt India's progress. This is an Indirect war against India.

Ends