Counterfeit notes have been circulating faster than ever,if seizures made are an indication. A report each by the Central Economic Intelligence Bureau and the Intelligence Bureau also notes the high quality of counterfeits,the suspected overseas sources as well as the emergence of local manufacturing units,and the use of international courier services.
The reports record a jump of more than Rs 14 crore from Rs 17.59 crore to Rs 32.13 crore in fake Indian currency notes (FICN) seized,the comparison being between January-June 2011 and the corresponding period this year. Seizures of Rs 1,000,Rs 500 and Rs 100 notes have gone up 47.7 per cent,105 per cent and 16.6 per cent respectively.
In September,three inter-state fake currency networks were busted by the IB and Bihar police. The Rs 1,000 and Rs 500 notes were close to perfection; their visual quality was assessed at 80 per cent of a genuine note. They had RBI and Bharat printed on the security thread,two features generally absent in counterfeits. The only two features missing were raised printing and optically variable ink.
Reports from the RBI show many seizures have been from banks and sometimes from the RBI itself. Of the total seizure in the first half of this year,the RBI accounts for Rs 10.47 crore more than police and other agencies do. It is a measure of the high quality of the notes that they have been penetrating banking channels.
IB reports in the past as well as now have blamed Pakistans state machinery for manufacturing the FICN the seized notes chemical features match those of Pakistans currency.
Sophisticated printing equipment seized from Delhi and Tamil Nadu has been another concern. The seizure reports of FICN along with printing accessories indicate that the FICN racketeers are also printing FICN locally, says the CEIB report.
About smuggling,the IB report states,FICN racketeers are trying to make use of courier services like DHL,Skynet,TNT and Cargo…further the payment (to courier services) is being made through banks in Nepal. The CEIB mentions a seizure in February by Hong Kong Customs,where a DHL courier parcel of ladies suits turned out to be 54 boxes filled with FICN. The parcel had been dispatched from Karachi to Kathmandu via Hong Kong.
The CEIB report states that FICN production in Pakistan has acquired a trans-national status with the distribution network extending to various transit points. It names countries as well as cities as such points: Thailand,Vietnam,Amsterdam,the UAE,Dubai,Kabul,Dhaka,Kathmandu,Bhutan and Colombo. It says India has become particularly vulnerable to FICN from Nepal and Bangladesh,the main hubs of pumping in such notes.
The IB has mentioned the emergence of a new hub,Tanzanian capital Dar-es-Salaam. A Tanzanian businessmen dealing in gold and precious stones,and with business interests in India,was recently caught buying FICN from a local resident and a Yemeni national. The report states that the suspicion is that the sellers were in possession of Rs 2 crore in fake notes. Usually,FICN is distributed in small amounts.
The reports note that a Bangkok-based module has been trying to smuggle FICN consignments to Nepal using American and European passengers,and through Vietnamese and Philippine passengers to Dhaka. It adds that it is suspected foreign nationals are being used for bringing consignments from UAE,Nepal,Bangladesh,Pakistan,Sri Lanka and Malaysia.
Intelligence inputs indicate that northeastern groups such as the NSCN(IM) sell FICN to middlemen who later sell it to distributors based in Namphalong and Tamu areas of Myanmar. There are inputs that in Bajhang district of north Nepal,which has a sizeable Indian population,Chinese buyers are transacting in FICN while buying local aphrodisiac.
It has been estimated that it costs only Rs 29 to make a fake Rs 1,000 or Rs 500 note,which is then sold at a profit of Rs 350 to Rs 450. This profitability has turned some districts on the Bangladesh and Nepal borders into distribution hubs. Reports received in the bureau from various state reveal that residents of bordering districts of West Bengal like Malda,Murshidabad etc are involved in the smuggling,circulation of FICN and have been arrested in places other than West Bengal like Tamil Nadu,Kerala,Bihar,UP,J&K and Maharashtra, states the 12-page CEIB report circulated last month.
In some instances,the law-enforcement agencies have noted,fake notes have been used in Malda for direct repayments against loans taken from Grameen Bank.
Security agencies suspect that proceeds from the racket are used for financing terror. During his interrogation by Bangladesh authorities,Maulana Saidu Rahman,chief of the outfit Jamatul Mujahideen Bangladesh,had reportedly confessed that part of his activities were financed by FICN proceeds. Besides,several key Lashkar-e-Toiba and Al-Badr operatives have been caught with FICN.
The IB report says that ISI operatives posted at different embassies frequently misuse diplomatic baggage for movement of FICN consignments. The officials of Pakistan embassies in countries like Thailand,Nepal and Bangladesh have been found to be actively involved in FICN-related activities. It adds that through the sale of FICN and arms and ammunition,the Pakistan embassy in Kathmandu is raising funds for those lodged in Nepal jails in connection with smuggling and circulation of FICN,to help them meet their legal expenses.
The Economic Intelligence Council headed by the finance minister has constituted a group consisting of officials of the Directorate of Revenue Intelligence,CBI and R&AW to share intelligence and neutralise modules.