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Kerala - Thiruvananthapuram Printer Friendly Page   Send this Article to a Friend

Crackdown on illegal foreign currency trade

G. Anand

Report to be sent to Enforcement Directorate


Illegal trading centred on airport area

Victims are labourers arriving from the Gulf


Thiruvananthapuram: The city police have begun a crackdown on illegal foreign currency trading business centred on the international airport here. The police will send a report to the Enforcement Directorate, the Central agency responsible for implementing the Foreign Exchange Management Act, 1999 (FEMA).

The police last week arrested two local residents suspected to be the key persons involved in the illegitimate business. Assistant Commissioner, Shanghumugham, P. Reghu said foreign currency of nearly Rs. 40,000 was confiscated from the suspects. He said the arrests had thrown light on the business of illegal foreign currency trading in the city.

The police suspect that more persons, including the managers of some licensed foreign currency trading firms, may be involved in the racket. The racketeers also have the backing of certain criminal gangs in the airport area.

The police said agents of the illegal foreign currency business often cheated unskilled labourers arriving here from their workplaces in the Gulf by giving them counterfeit Indian currency in return for U.S., U.K, European, Gulf, Singapore and Malaysian money. Often they used gangsters to intimidate the victims who dared to challenge them or inform on them. The police said the racketeers lured customers by offering a higher foreign exchange rate than that offered by licensed transactors.

The FEMA prohibits dealings in foreign currency, except through authorised persons. The law restrains any person resident in India from acquiring, holding, owning, possessing or transferring any foreign exchange or foreign security except as specifically provided in the Act.

The police are also investigating whether the racketeers have facilitated leakage of foreign exchange by making remittances and compensatory payment to persons abroad through hawala (an illegal and largely secretive money transfer practice used by those who want to avoid normal banking channels for various reasons) conduits.

Foreign accounts

The police are also collecting intelligence on certain city-based businessmen who have acquired foreign currency illegally through the racketeers. They suspect that the foreign exchange collected illegally from air passengers disembarking at the airport here reached the hands of those maintaining unauthorised accounts in foreign countries.

Investigators said that dubious exporters and importers who profited from under-invoicing of exports and over-invoicing of imports and other types of invoice manipulation, including siphoning of foreign exchange against fictitious and bogus imports, also benefited from the illegal foreign exchange trade.

Dubious businessmen also used such illegally acquired foreign exchange for secretively paying commission to their collaborators or their agents in foreign countries, the police said. Extremist and religious fundamentalist organisations were also known to use hawala and other non-banking channels to mask their monetary transactions from law enforcers. City Police Commissioner M. R. Ajith Kumar is supervising the police action.

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