New crypto adds many blindfolds to old hawala, Pg3

Key Highlights:

• In 2024, a Ghaziabad trader moved Rs 1.3 crore of crime money to a Dubai-based crypto wallet.
• A Delhi businessman is accused of moving over Rs 4,000 crore internationally via fake invoices using shell companies.
• Over Rs 1,000 crore in cyber fraud proceeds exited India through crypto wallets this year.
• Cryptocurrency exchanges lack strong oversight, attracting both investors and illicit activities like money laundering.
• Trading volumes on Indian exchanges fell 97% between April 2022 and July 2023, with Rs 35,000 crore moving to offshore platforms.

Detailed Insights:

• Hawala transactions are increasingly using virtual assets due to technology and regulatory gaps in the crypto space.
• The anonymity offered by crypto enhances the efficiency of hawala's trust-based network, operating outside formal banking.
• Fragmented global crypto regulation allows illicit funds to move through mismatched legal systems, similar to traditional offshore finance.
• Ransomware groups, drug syndicates, and sanction evaders are using crypto for its speed and anonymity.
• The Indian government is cautious about regulating crypto, fearing it might legitimize a volatile and risky asset.
• A premier investigative agency is storing around $4 million in seized digital assets with a custody firm, awaiting Home Ministry guidelines for secure storage.
• Indian exchanges face regulatory uncertainty, while offshore platforms freely serve Indian users, impacting the sector's sustainability due to taxes like the 1% TDS and 30% capital gains tax.
• Major Indian exchanges have ownership structures under foreign holding companies, partly due to India's regulatory uncertainty.

Key Concepts Involved:

• Hawala: An informal value transfer system based on trust, operating outside traditional banking channels.
• Cryptocurrency: A digital or virtual currency that uses cryptography for security.
• Blockchain: A public, distributed ledger that records transactions across many computers.
• Money Laundering: The process of concealing the origins of illegally obtained money.