Little effect of Demonetisation in Kashmir as separatists receive ‘hawala' money

The police and banks have made a large haul of fake currency in Kashmir, including that of 100 rupee notes, while security agencies maintain that separatists are “receiving hawala money” through local businessmen here.

According to police officials, tracking hawala money of the separatists was difficult as they receive funds in genuine notes “through local businessmen”. Moreover, they add, that the demonetisation of 500 and 1,000 rupee notes could have little effect, as not only have large captures of 100 rupee notes been made here, but police have also seized machines owned by local criminal gangs, with which they have been printing out other denomination notes as well.

According to data from the National Crime Records Bureau (NCRB), the large haul of fake currency also includes 100 rupee notes. NCRB data reveals that in 2012, 633 currency notes of Rs 1,000 denomination were recovered by the Reserve Bank Of India (RBI) and police, while the capture of 100 rupee notes was higher in volume — 1842. The seizure of 500 rupee currency notes was highest at 4,713, and the total recovery of fake currency seizure was Rs 31.7 lakh during the year. On the contrary, in 2013, the total recovery of fake currency was worth Rs 35.2 lakh and the 1,000 rupee denomination was 1,598 notes, while 500, 100 and 50 currency notes were 3,544, 1,562 and 34 in number. In 2014, the currency seized amounted to Rs 20.2 lakh, of which Rs 1,000 currency notes numbered 218, 500 denomination notes at 3,423, while 100 and 50 rupee notes were 999 and 7. In 2015, as per the NCRB report, 13 cases of fake currency capture were registered by police.

However, according to police officials, fake currency was largely benefitting local criminal networks in the state.

According to senior police officials, it was rare that the fake currency was used by separatists, who depend on hawala and receive the money from Pakistan through their contacts and even businessmen. “Some of the businessmen have contacts from across the border and the money is supplied to separatists through transactions, which are done through business deals involving multiple countries. It is a possibility that those who are involved in the cross-local trade also get the money from Pakistan which makes it to the separatists here,” a senior police official said.

Inspector General of Police, Jammu Range, Danish Rana, said that the fake currency was not only “reaching” militants, but was also used by local criminal networks. “Number of times we have recovered the machines which are used by local criminal gangs to produce fake currency. The production of fake currency wrecks the economy.” He, however, said that there were other “funding sources for the separatists, including the hawala money in which the currency is not usually recovered. There are many modus operandi that are used for hawala transactions. It is like betting in which we mostly recover some papers containing instructions in coded format and the mobile phones and rarely recover money. There may be businessmen involved in hawala racket who may be receiving funds from foreign countries for the separatists.”

According to police officials, in many cases, the banks have provided the information about the deposit of fake currency notes, which later lead to capture of a large amount of money. A senior police official said that they “were earlier intimated by a private bank about the deposits of fake money made by a group of 10 people which came from Pakistan. We made the seizure of over Rs 10 lakh and the money was surprisingly not for militants, but to run some businesses here,” said the official.

Superintendent of police, Sopore, Harmeet Singh, said that the there are many cases in which the fake currency notes were supplied from across the border “to be provided to the militants through local contacts”.

Deputy Inspector General (DIG) of Police, North Kashmir range, Uttam Chand, said, “Hawala means and fake currency was largely funding the militancy in Kashmir.” He added that the “move to demonetise the currency notes may help in the longer run as the vigil on the activities of people stashing away black money intensifies.” However, officials said that even if the government has scrapped 500 and 1,000 denomination notes here, it was not difficult for “those involved in fake currency rackets to use alternate denomination notes”.