By Animesh Roul*
February 22nd, 2014
The fake currency trade has been haunting Indian security establishments as well as economic intelligence agencies for quite a long time. Most recently in February 2014, the finance minster of India informed the Upper House of Parliament (Rajya Sabha) that counterfeit Indian currency notes worth INR 107.33 crores (approximately US $ 17 million) have been seized between January 2010 and June 2013. If the intelligence agencies are to be believed, the FICNs are printed in Pakistan and brought to India through couriers via Bangkok, Kathmandu and Dhaka airports. There are also reports that the FICN cartels are pushing counterfeits through China, Malaysia, the United Arab Emirates (UAE), Denmark, Netherlands, Singapore and Sri Lanka.
To deal with this growing menace, the government has constituted a special FICN coordination (FCORD) group within the Union Ministry of Home Affairs to share intelligence and information amongst different central and state government agencies. The Central government has asked Research & Analysis Wing (R&AW) to conduct a security audit of the international firms supplying ink and paper for printing currency. Sources indicated that ‘groups based in Pakistan have managed to source similar paper and security ink from some foreign countries.’
Is this part of Pakistan’s design against India (‘economic jihad’) waged along with its proxy wars and organized crime syndicates? The answer is in the affirmative. The observation received a major boost when the 2011 International Narcotics Control Strategy Report of the US Department of State underscored the scourge of FICN. The Report observed that, “India (also) faces an increasing inflow of high-quality counterfeit currency, which is produced primarily in Pakistan but smuggled to India through multiple international routes. Criminal networks exchange counterfeit currency for genuine notes, which not only facilitates money laundering, but also represents a threat to the Indian economy.”
Indian intelligence agencies have already found that that most of the FICNs in circulation in India are reportedly printed in government-controlled printing presses at Karachi, Multan, Quetta, Lahore and Peshawar in Pakistan, and the Inter-Services Intelligence (ISI) has a major role in it.
Counterfeit Funds Terror
The terror-linked crime syndicate of Dawood Ibrahim is involved in FICN activities since long. Two of his gang members, identified as Aftab Bhakti and Babu Gaithan, are managing the entire operation from Dubai. According to reports, they find Indian labourers in Dubai and buy them a return ticket to India and give them a suitcase containing fake currency along with other pleasantries (IBN Live, October 17, 2011).
Investigations into past terror conspiracies and confessions by arrested terror operatives have more or less reinforced the fact that actors (both State and non-state) in Pakistan are solely responsible for printing and smuggling fake Indian currencies through various channels to fuel terrorism and criminal activities inside India. Large portions of funding for Kashmir- centric Hizbul Mujahideen comes from fake currency cartels based in Pakistan. The March 2011 arrest of HM operatives in Delhi proved the point that the Kashmir-based militant group has been running an FICN operation with Pakistan’s connivance. Terror events like the attack on the Indian Institute of Science in Bangalore (Karnataka) in December 2005 and the November 26-28, 2008 Mumbai terror attacks have a counterfeit trading and hawala (informal and illegal money transfer system) link. Last but not the least, arrested Lashkar-e Taiba operative Abdul Karim Tunda revealed how Pakistan’s intelligence agency ISI used to run the entire supply chain of FICNs. Tunda also spilled the name of Iqbal Kana, who according to him, is the kingpin of FICN dealings in Pakistan. Tunda has been moving counterfeit notes to fund terrorism India through his contacts inside the country (The Hindu, August 21, 2013). The Indian Mujahideen which has Pakistan’s patronage also raises funds through hawala transactions and circulation of fake currency. While doing this, terror groups move genuine and fake currencies together to evade suspicion. IM operative and sympathizer Maulana Hussain Shabbir Gangavali, a suspect in the July 2008 Bangalore blasts case, was found guilty in a case for the possessing 250 counterfeit currency notes (Times of India, November 23, 2011).
IM’s India operations chief Yasin Bhatkal was also arrested once by the Kolkata Police’s Special Task Force (STF) in 2009 for carrying fake Indian currency notes, but managed to get bail in that case (India Today, August 29, 2013).
Acts of Terrorism
FICN trading has been a major source of funding for terrorism in India. However, there was some legal loophole due to which it could not be labeled as an act of terror under Indian law. The Mumbai High Court in late October 2012 stated that the mere possession and circulation of fake currency cannot be termed an act of terror under the provisions of the Unlawful Activities (Prevention) Act. The Court observed that “circulation of counterfeit currency, even if it is printed in a foreign country can’t be considered, by definition, as a terrorist act”, while granting bail to one Dhiren Ghosh, arrested by the Maharashtra Anti-Terrorism Squad in 2009 for alleged possession of counterfeit notes. However, a couple of months later, Indian Parliament passed a bill on the issue making the circulation of counterfeit currency (not mere possession) either by an individual, group of individuals or an association, as a terrorist act. Arguably, the bill was in tandem with the suggestions of the Financial Action Task Force (FATF) of which India became a member in 2010. Following this development, in January 2014, a special National Investigating Agency (NIA) court gave life term to six convicts in a 2009 FICN case including Dhiren Ghosh, Nooruddin Bari, Mohammed Samad and Aizul Shaikh and convicted them under Section 16 and 18 of the Unlawful Activities (Prevention) Act (UAPA) and Section 489 of Indian Penal Code (IPC) on January 29, 2014 (Press Trust of India/First Post, January 30, 2014).
India’s FICN problem has received increased international attention with the US Department of State and Interpol exchanging classified information on the developments. The Unlawful Activities (Prevention) Amendment Act, 2012 as passed by Parliament has come into force from February 01 2013 which undoubtedly broadens the scope of the ‘terrorist act’ by incorporating threats to the economic security and the monetary stability of India by way of production, smuggling or circulating of high quality counterfeit fake currency. The law increases the period of declaration of an association as unlawful from two years to five years, criminalizes high quality counterfeiting and includes within its scope offences by companies, societies or trusts and provides punishment.
While the Reserve Bank of India (RBI) takes a decision to withdraw currency notes issued before 2005 to curb counterfeiting and attempts to improve the security features, now the onus is on the security agencies to track down Islamic terror groups, left-wing extremists and other separatist entities which have devised novel methods to receive and raise funds for their anti-India operations.
* Animesh Roul is the Executive Director at Society for the Study of Peace and Conflict, New Delhi and Contributing Expert at the ACD Terror Finance Blog.
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