Well-Oiled Ring Offering To Change Old Notes For A Hefty Commission, Say Officials

The cash haul in Uttar Pradesh last week, where 16 people were arrested for allegedly storing scrapped ₹500 and ₹1,000 notes worth ₹96 crore is a case in point.

The government’s decision to scrap ₹500 and ₹1,000 notes in 2016 has led to the creation of a space for police acting as complainants in multiple cases of ‘cheating.’ The cash haul in Uttar Pradesh last week, where 16 people were arrested for allegedly storing scrapped ₹500 and ₹1,000 notes worth ₹96 crore is a case in point.

The tip-off was provided by the National Investigation Agency (NIA) and the accused were booked for cheating with the police as the complainant.

As per the Specified Bank Notes (Cessation of Liabilities) Act, 2017, a person can only be fined for storing old currency notes and it’s a non-cognisable offence.

On November 8, 2016 Prime Minister Narendra Modi in a televised address to the nation had announced that the ₹500 and ₹1000 notes were no longer valid. He described the move as a measure to address black money hoarding and to curb terrorist activities.

Officials say they have identified a well-oiled ring that was offering to change the old currency notes for new ones for a hefty commission.

With no one to complain in such cases, the police are registering the case on their own.

Anurag Arya, Superintendent of Police, Kanpur (East) where the arrests were made said one of the accused, Anand Khatri, a sari shop owner had stored the notes at his house and had been collecting them for the past six months. The money belonged to Khatri, Santosh Yadav and Mohit.

Provision for penalty

As per Section 7 of the Specified Bank Notes (Cessation of Liabilities) Act, 2017, “whoever contravenes the provisions of section 5 shall be punishable with fine which may extend to ten thousand rupees or five times the amount of the face value of the bank notes involved in the contravention.”

Security agencies have picked up phone conversations of money launderers who were using terminologies like “receipt and revert, second channel, VP Slot and U-Turn” as various methods to launder money through the banking system.

“These code words are a mystery to us as well. The exchange of old currency notes through fraudulent means stopped in March 2017” said the official.

The Income Tax Department and State police officials said they had identified several such agents in Delhi, Haryana, Gujarat, Maharashtra, West Bengal, Andhra Pradesh and Karnataka who were contacting people who had hoarded cash.

Another official said these agents claimed to have a contact in the RBI who would assist them in getting new notes.

He said that several cash hoarders had retained their stock in the hope that the government would allow a short window some day to exchange the old notes.

Another official said attempts were also being made through Temple Trusts for this purpose.

Explaining the money laundering method, an official said, “VP Slot probably means that two VPs of two banks will sit on their systems at the same half hour slot and then large sums of 100 cr etc will be transferred without being recorded on the database.”

Source: The Hindu