Key Points
- Jaipur’s income tax authorities have exposed a money laundering scheme involving hawala networks and cryptocurrency transactions.
- Investigations have revealed unreported cash payments in exchange for cryptocurrencies through hawala operators in Gujarat and Rajasthan.
The income tax authorities in Jaipur have discovered a sophisticated money laundering scheme involving hawala networks and cryptocurrency transactions.
Uncovering the Money Laundering Scheme
The Economic Times reported that the Income Tax Department of India had discovered a multifaceted network involving hawala operators and cryptocurrency transactions. This came to light after the department raided multiple wedding planners in Jaipur. The raids resulted in the confiscation of $2 million, or Rs 20 crores in cash and jewellery, from at least 20 wedding planners in the city. Three cryptocurrency wallets connected to the scheme were also seized, two of which were linked to local platforms and the third to a major international cryptocurrency exchange.
The investigations further revealed that clients made cash payments that weren’t reported in exchange for cryptocurrencies like Bitcoin (BTC) and Tether (USDT) through hawala operators in Gujarat and Rajasthan. Hawala, an illegal money transfer system, employs brokers to transfer payments overseas without an actual money transfer.
The Challenges of Tracing Cryptocurrency Transactions
The stricter Know Your Customer (KYC) regulations on registered cryptocurrency exchanges have made it challenging to deposit hawala-obtained cryptocurrency. It’s believed that the accused may have exploited exchanges with laxer KYC policies or used intermediaries to exchange cash for checks to purchase cryptocurrency via local exchanges.
Evidence of these activities, such as Whatsapp conversations, emails, and spreadsheets, has been retrieved. Further efforts will be made to identify everyone suspected of receiving unreported cash.
The network, officials believe, extends beyond Jaipur, with links to several major cities including Mumbai, Hyderabad, and Delhi. The raids also uncovered a network of resort and hotel owners, catering and decoration services that allowed customers to pay in cash or through banking channels. The authorities are now considering conducting similar raids in other cities as part of a broader crackdown on untraceable transactions in the wedding and events industry.
