Hawala gangs mint more profit than smugglers | Gold smuggling series part 4

Representational image
Representational image.

Some hawala gangs mint more profit than what is gained through gold smuggling. Their business is to channel the hawala money from Saudi to different parts of the world.

A Malayali gang in Dubai conducts business worth Rs 500 crore in hawala and reverse hawala in a day.

A small hawala trader in Kozhikode said he does reverse hawala deals worth Rs 1 crore a day.

(Read the previous articles in this series: Part 1, Part 2 and Part 3)

It is not easy to send out significant amounts directly through official channels, including banks in Saudi Arabia.

More than one document is needed to send out Saudi Riyal, equivalent to Rs 1 lakh. The measures taken as part of curbing the funding of terrorist organisations are also stringent. Hawala has more takers under these circumstances.

Hawala and gold smuggling are linked in an inseparable chain. Some people handle both at the same time. Mr. M, who accompanied me to Gold Souk, is one such player. Players like him buy gold using the money they get from hawala deals and smuggle it to Kerala. Then, they sell that gold and distribute hawala money back home. There are people who sell gold in Mumbai, Bengaluru, Chennai, or Coimbatore and take that money in a car to Kerala.

Crores of rupees change hands in small office rooms of hawala operators in Deira and Gold Souk in seconds. The hawala rates change in tandem with the changes in official rates and gold prices. There are Malayali gangs in several parts of the world who are capable of providing money in the currency you want at the moment when Saudi Riyal is handed over to the hawala agent in Saudi. The Riyal collected in Saudi is smuggled to Dubai mainly in two ways. One method is to bring the currency in vehicles to Dubai and change it through currency exchanges. There are no legal hurdles to doing this in Dubai. The second is to influence certain bank managers in Saudi and send vast amounts to Dubai through the bank account itself. The advantage of the method is that the amount can be withdrawn as Dirham itself in Dubai.


Hawala, the ‘profit’ channel
If a Dubai-based hawala agent does a business of one lakh Saudi riyal, he can garner a profit of 2500 UAE Dirhams. If the currency exchange is done as per the official exchange rate, one will get 97,800 UAE Dirhams for one lakh Saudi riyal. If it is done through a hawala agent, a person in Dubai will get 95,300 Dirhams. The agents will make this amount available in any country in any currency that the client chooses. When one compares with the official rate, the hawala customers incur much loss. But then they ask which other mechanism can quickly transfer money to any part of the world without needing any documents. Moreover, those who mint money by indulging in suspicious activities often ignore such losses.

Persons opting for the hawala route could make temporary gains, but once caught, things won’t be easy for all parties involved in the illegal money transfer. The agencies probing anti-national activities would strictly monitor every dealing of the person in question and even his close circles. This is because the probe outfits suspect that vast amounts of money collected through the hawala channel are diverted for anti-national activities.


Reverse hawala rate
If a person sends money from Kerala to Dubai, they will get 4,606 UAE dirhams for Rs one lakh, going by the official exchange rate. But they face several hardships. Since the money is officially recorded, it’s difficult to use the amount for unlawful purposes. Besides, individuals face many hurdles in sending considerable amounts to foreign countries. No document is needed to send money through the reverse hawala, though the exchange rate will be less than the official rate.

If one goes by the hawala rate to Kerala, he needs to get 4,420 Dirhams in Dubai upon handing over Rs one lakh to an agent in Kerala. But anyone outside the hawala or gold smuggling chain would get only 4,370 Dirhams. Primarily those who earned black money through illegal means opt for the reverse hawala to transfer money abroad quickly. Clients should be ready to dole out higher charges if they want to send money urgently during emergencies by overcoming the official systems.


Political gold
Even those who do wholesale gold dealings legally use this term in Dubai – political gold. This refers to the gold possessed by the rulers of certain African countries with gold mines. Many wholesale dealers deal in this. Business people from foreign countries, including India, run gold mining businesses by making certain rulers of African countries or their close relatives the business partners. Many such ventures are legal. However, there are many illegal ones, which the individuals dug up in a completely unscientific manner in lands owned by them. The gold thus procured finds its way to foreign countries through certain wholesale dealers and turned into investments. A mine owner requesting anonymity revealed he had handled 2500 kg of political gold belonging to politicians and officials.


‘Mirror to mirror’ dealings of politicians
If the revelations of a Dubai-based key link in the wholesale gold trading sector can be believed, certain political leaders in Kerala, among others, are investing black money in the gold smuggling business through benamis.

This, they do via Africa. On one occasion, the black money from Kerala reached his hands as dollars when he was in an African country. The businessman who refuses to reveal his identity says, "The money is received through the hawala agents based in Bengaluru, Mumbai, and Delhi. They term this illegal process as a mirror to mirror transaction. Money will be provided in dollars in African countries at the same time the amount is handed over to the agent in Mumbai. There are many small-scale, illegal gold mines in African countries. Since they have no license, the gold procured from them can’t be legally traded. Such gold is bought using hawala money. The gold will be sent to Dubai-based companies set up in the name of benamis. These firms purify the gold before selling or smuggling them into India. Wholesale traders will scrutinise every detail of the clients. If the money is generated through criminal activities, it may result in legal tangles later. The examination is done to avoid such scenarios. They will only have a maximum of four or five dealings with a single company of the benamis.

The latter would have registered a new company by then. This is to evade arrest and destroy every shred of evidence in the event of an investigation.
(This is the fourth part of the series on gold smuggling)

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