Do you know what HAWALA is??
“HAWALA”, a word is making headlines very often. Hawala means ‘TRUST’ Hawala is also known as HUNDI is an informal value transfer system based on performance and honor of Money broker. Simply Hawala is a system or agency of transferring money based on trust, whereby money can be made available internationally without actually moving it or leaving a record of the transaction. It involves money transfer without the knowledge of the Reserve Bank of India and the Law Enforcement Agencies.
WHY IS HAWALA USED??
Because of the number of the people involved it’s tough to collect evidence and prove it is the court. It can be used in the court to evade taxes, beat exchange rates, to transfer Black money. There are some reasons behind of Hawala used they are:-
1. The commission rates for transferring money through Hawla are quite low.
2. No requirement of any ID proof and disclosure of source of Income is there.
3. It has emerged as a reliable and efficient system of remittance.
4. As there is no physical movement of cash, Hawala operators provide better exchange as compared to the official exchange rates.
5. It is simple and hassle free process when compared to the extensive documentation being done by the bank.
6. It is the only source to transfer unaccountable income.
OTHER FUND WIRE SYSTEM FOR MONEY LAUNDERING
CHIPS: - Clearing House Interbank Payments System. An interbank payments system is related to the international trade. CHIPS is used for the transfer of international trade Dollar.
CHAPS: - Clearing House Automated Payments System. Operated by bankers clearing house of London. CHAPS is used for interbank messaging and wire transferring involving British Pounds.
BOJNET: - Electronic wire transfer system overseen by the Bank of Japan.
THE PUNISHMENT FOR MONEY LAUNDERING
U/s. 4, PMLA, (Prevention of Money Laundering Act.)
Rigorous punishment for not less than 3 years but may extend to 7 years or in some cases , even up to 10 years a person also have to pay a fine of Rs. 5 Lakh.