What is hawala business? Understand how the money transaction is done in hawala network, what is the provision of punishment
What is Hawala: You have often heard the word ‘hawala’ in the news, especially when it comes to a big financial scam or illegal transaction. But do you know what this hawala business is and how it works? Also, in the context of law, hawala is placed in which category? Let us know the answers to all these questions today and will also know what are the laws for this in India.
What is hawala?
Simply put, hawala is an informal and illegal money transfer system that operates outside traditional banking or financial institutions. It is used to transfer money without any official records or transactions without any official records or transactions. It is often used for white money white, tax evasion and other illegal transactions. The system operates through a network of hawala brokers, known as ‘hawaladar’, which transfer funds to customers without using traditional financial institutions such as banks.
How is transaction in hawala,
The money of hawala is transferred in a very confidential manner, as its purpose is to cheat banks and investigative agencies. Let’s understand how it works:
1. Money sender and agent contact: First, the person sending the money contacts a hawala agent and gives him the amount he wants to send. Also, he also gives the agent a commission to serve his service.
2. Network of Agent: Subsequently, the hawala agent informs other hawala agents present in its network, which occur in another city or country.
3. access to recipient: The agent present in another city or country hands over the amount directly to the recipient without any formal record or bank transaction. There is no paperwork or bank use in this entire process, which hides the source and destination of money.
What is the money of hawala,
The money of hawala is the amount that is sent from one place to another through this informal system. Since this transaction is completely off-the-book. Hawala money is also used for illegal activities such as terrorism funding, drug smuggling and money laundering. Because this money remains out of the monitoring of the official financial system, it makes it extremely difficult to detect.
What is the provision of punishment when caught,
The hawala transaction in India is mainly punishable under two laws: Foreign Exchange Management Act (FEMA), 1999 and Money Prevention Act (PMLA), 2002.
, Money Laundering Prevention Act (PMla), Under 2002: If the hawala transaction is found to be associated with money laundering, the culprits may be jailed from 3 years to 7 years. If the crime is associated with serious crimes like drugs or terrorism, then the punishment can be increased from 7 years to life imprisonment. In addition, a fine can also be imposed, which can usually be up to Rs 5 lakh, although this amount may vary on the basis of case.
, Forex Management Act (Fema), Under 1999: If hawala violates the foreign exchange rules, the mention of the gel period in the sentence is short, but the penalty is prominent, which can be up to three times the amount of transaction. For example, if a hawala transaction of Rs 1 crore is caught, a fine of up to Rs 3 crore can be imposed.
