Laundering evolves

With people who had secured new currency notes through back channels now fearing to be caught, dealers are now buying old currency and depositing them in multiple bank accounts.

Published: 18th December 2016 05:58 AM  |   Last Updated: 18th December 2016 05:58 AM   |  A+A-

S S Shishodia, President, AIBOA

Express News Service

BENGALURU: The black market in the country has been more active than ever and the unaccounted money in new currency seized through IT raids across the country is just the tip of the iceberg.  
While Thursday was the last day for accepting the demonetised `500 notes in some exempted institutions like hospitals, demonetised notes are in high demand in the black market. In fact, if sources are to be believed, there’s a scarcity.

Explaining how the black market was functioning and why demonetised notes were in such high demand, IT sleuths told Express that several people who had secured new currency notes from banks through back channels now feared being caught. Hence, they were buying old currency from dealers and depositing this in different bank accounts. The profit margins for facilitating the transactions were as high as 35- 50 percent.

A senior IT official in Bengaluru said the operating procedure involved several ground level operators and multiple layers of transactions to avoid suspicion. This widespread network included the affluent, labourers (used to route money), hawala operators and in some cases, bank officials.

The official added: “A person who was able to secure a large amount of money as soon as the new currency was issued, now knows that he is sitting on a time bomb. So they are buying demonetised notes in the black market and depositing it in the bank. The deposits are done into various accounts and through multiple channels.”

At the ground level, women are used as the front. When a person places a call to secure old currency, they are taken to one place only for the venue to be changed later, forming a long chain of people before reaching the dealer.

As an affirmation of their hunch, IT officials who have taken part in raids found to their surprise that the new currency notes were already crumpled. “This only means that it has changed several hands in such a short span of time.”

Another top source in the department added that jewellery shops were in this loop too. When they went to check the records, they found that jewellers were helping in creating fake receipts by taking a commission. People hand over unaccounted money to the jeweller who will then show it as part of his sales. “The records have been fudged and the annual sales that they showed us was disproportional to the previous year’s sales. Further, when we went to check the addresses, the majority of them were fake,” said an official, adding that the receipts are issued to amount less than  `2 lakh to avoid scrutiny.

Tracking is laborious
IT officials also pointed out that their actual work of tracking suspicious transactions would begin post December 30, the last date for depositing demonetised notes in the bank.

Speaking about fake accounts and money deposited into accounts by using someone else, All India Bank Officers’ Association President S S Shishodia said, “Some zero balance accounts suddenly have so much money. These are people below the poverty line. Since the amount deposited is within `2 lakh, banks cannot question.”

Raj Kannan, individual observer and cyber security expert opined that it was time for banks to adopt surveillance tools. “Under normal circumstances the KYC surveillance may work very well. However, given the volume of accounts being opened now, it might not be possible to look at the exceptions.

Making fingerprint mandatory for account opening could was a good option to strengthen the security, he added. There were several tools which could detect and alert any unusual transactions. These are being used it banks abroad. The RBI should more proactively pursue this,” he said. 


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