By Ajit Kumar Singh
Pakistan’s external intelligence agency, Inter Services Intelligence (ISI), continues to pump increasing volumes of Fake Indian Currency Notes (FICN) in its campaign to raise finances for, and to provide financial assistance to, Islamist terrorists, in order to sustain their jihad against India, and to destabilize the Indian Economy. As new routes are discovered, and large amounts of fake currency are recovered, it is abundantly clear that this strategy has intensified over time, bringing volumes of FICN into India that have significant destabilizing impact. According to one recent report, the Government of India (GoI) estimates that FICN worth INR 160 billion is already in circulation within the country. Direct links to FICN have been documented in at least 15 cases of terrorist funding.
Significantly, on April 3, 2012, acting on inputs provided by Indian agencies, the Nepal Police arrested a Vietnamese woman in possession of FICN worth INR 9.8 million, at Tribhuwan International Airport in Kathmandu. The consignment had been delivered to her in Vietnam by conduits working for Pakistani handlers. The woman reached Kathmandu, where she was arrested, via Bangkok (Thailand). The arrest exposed a completely new route (Pakistan-Vietnam-Nepal-India) of FICN flows, even as established routes come under closer scrutiny. The Pakistan-Bangladesh-India and Pakistan-Dubai-India trajectories, for instance, have been on India’s intelligence radar for some time now, and, as one unnamed senior intelligence officer notes, “There is greater screening of passengers coming via Dubai [United Arab Emirate (UAE)] or Bangladesh. One would generally not suspect a Vietnamese coming from her country to be carrying fake currency.”
Noting other changes in modus operandi, another official observed, “counterfeiters keep reinventing themselves” and “the (Vietnamese) woman paid the required duty on the high-end liquor bottles stuffed with FICN and made it a legitimate consignment.” In another recent incident, he disclosed, “we had busted a racket in which fake currency was concealed in cigarettes. The accused had removed tobacco and rolled notes into the empty space.”
Reflecting the increasing trends in the injection of FICN into the Indian financial system, the Annual Report (2010-11) of the Financial Intelligence Unit (FIU), under the Ministry of Finance, stated that there was a 400 per cent increase in Counterfeit Currency Transaction Reports (CCTRs) received by the agency. The report stated that, during financial year 2010-11, the agency received 423,539 CCTRs with a value of over INR 350 million. There were 127,781 CCTRs for the financial year 2009-2010, with a face value of INR 100 million. 35,730 CCTRs were recorded in financial year 2008-2009 and just 8,580 in 2007-08.
Pakistan’s involvement in the production and circulation of FICN has long been established. More recently, the National Investigation Agency (NIA) reconfirmed the Pakistani role after it arrested two persons on March 28, 2012, along with FICN amounting to INR 985,000. The Agency disclosed that the FICN was being smuggled into India by Pakistan-based FICN dealer Iqbal Kana, who belongs to Kairana Tehsil of Muzaffarnagar District in Uttar Pradesh (UP), India, and who operates from Pakistan. Noting the very high quality of duplication exhibited in the FICN seized at Taliparamba, Kerala, on September 18, 2011, the NIA stated before the Kerala High Court, on February 14, 2012, that the involvement of a state (Pakistan)-sponsored racket was a certainty. Sources disclosed that an ISI officer, Aslam Chaudhary, was understood to be the main person within the ISI, handling the printing of FICN in Quetta (Balochistan), Karachi (Sindh), Lahore (Punjab) and Peshawar (Khyber Pakhtunkhwa). Reports also indicate that the paper for the fake notes is sourced from London, Netherlands, Germany, Italy and France. A March 10, 2012, report indicates, further, that Dubai is emerging as a new and major printing centre for FICN. The notes are printed in denominations of INR 500 and INR 1,000. Earlier, on August 13, 2011, one news report claimed that a ‘secret’ report prepared by Indian intelligence agencies asserted that China was also being exploited as a major staging post for the FICN flooding into India. The report claimed that the movement of FICN was actively facilitated by Pakistan’s High Commission in Dhaka and Embassy in Kathmandu.
Pakistan is believed to facilitate at least 28 important ‘FICN networks’, which operate out of Bangladesh, Nepal, Pakistan and Bangkok. Countries including the United Arab Emirates (UAE), Sri Lanka and Malaysia have also been used as transit points. Apart from nationals from these countries, the Indian security agencies have arrested FICN couriers from Somalia and Hong Kong as well.
Nepal, however, with its entirely porous borders with India and poor internal security system, remains the route most preferred by Pakistani handlers. Media reports indicate that nearly 75 per cent of the FICN flow, emanating from Pakistan, made its way to India through Nepal. On January 31, 2012, an unnamed Border Security Force (BSF) officer stated, in a news report, that FICN of a face value of INR 80 million had been seized in Nepal over the preceding three years. Not surprisingly, the border Districts of Bihar provide a principal transit route for couriers from Nepal. Bihar has witnessed a steep rise in the smuggling and circulation of FICN in 2011. According to the State Police, FICN worth INR 4.14 million were recovered in 2011 (till December 15). In the corresponding period of 2010, FICN worth INR 1.86 million had been recovered, while in 2009 FICN worth INR 1.30 million was recovered. Similarly, according to a March 30, 2012, report, FICN was being pumped into 40 Districts of UP, which also borders Nepal. Media reports, meanwhile, suggest that 36.8 percent of large FICN seizures in India (above INR 1 million) over a five-year period had been ‘directly sourced’ from Pakistan.
The Rajasthan and Punjab borders are the other corridors through which Pakistani agents push fake currency into India. Sea-borne consignments have also been known to be delivered to Tamil Nadu (from Sri Lanka) and Gujarat (from Pakistan). The fake currency is offered to crime networks throughout India at a 1:2 ratio of original currency to counterfeit currency.
Sources indicate that three nodal centers have been set up in Jammu in Jammu & Kashmir (J&K), Malda in West Bengal, and in Nepal, for the distribution of FICN across India. Jammu is the nodal point for the western, southern and northern parts of India, while Malda is the principal conduit for West Bengal, Bihar and the north eastern States. The centre in Nepal is used for stocking and distribution of counterfeit notes and smuggling them to Bangladesh for distribution across Assam and the eastern frontier states. Sources also note that at least 12 modules have been set up in cities and towns across India, to penetrate deep into urban and rural areas.
As stated, reports link FICN to at least 15 cases of terrorist funding. Lashkar-e-Toiba (LeT) operative David Coleman Headley, in his disclosures to US authorities, confessed to having been given INR 250,000 in FICN in Pakistan by his handler for a trip to India to set up the plot for the November 26, 2008, Mumbai terrorist attacks (also known as 26/11), which eventually resulted in 166 fatalities. Sources indicate that the LeT has been used by the ISI for distribution of FICN in India, even as it is partially funded by FICN flows. In March 2102, moreover, the CBI exposed an FICN racket operating in India’s Northeast with help from militants in Nagaland. The revelation was made after interrogating Malda-based Barkat Ali, who was arrested on March 12, 2012, near the Guwahati Railway Station in Assam.
India’s security agencies have succeeded in mounting some pressure on FICN couriers over time. In the most successful operation in the recent past, the NIA synchronized operations with different State agencies and the BSF in January 2012, to expose an international network of FICN handlers. On January 6, 2012, it arrested the leaders of the network, Morgen Hussain, and Rakib Sheikh, while simultaneous raids were conducted across the country, in which another 12 persons were arrested and significant seizures were made. On the revelation of the persons arrested, the NIA arrested another two persons – Imran and Jenab – on March 28, 2102, along with FICN worth INR 985,000. According to the NIA, “Morgen Hussain and Rakib Sheikh of Jamsedtola, Mahabbatpur, PS Kalichak, Distt. Malda were coordinating smuggling and circulation of FICN across the country…”
Earlier, on December 22, 2009, in Jharkhand, the SFs had arrested D. Manarul Sheikh (48), an alleged kingpin involved in circulation of counterfeit currency. “Sheikh is one of the most important accused and a key player in the circulation of FICN across the country. Preliminary investigation reveals that the fake notes came from Bangladesh and Nepal,” Deputy Superintendent of Police N. Mohan, who led the team, stated. Meanwhile, Abdul Rehman Haji from Hosdurg Kolavayal in Kasargod District (Kerala), who is said to be the chief operator of a cartel engaged in supplying FICN printed in Pakistan to Kerala and Karnataka, was arrested in Dubai by the Dubai Police, on March 7, 2012.
On August 6, 2010, a Committee set up to review practices and procedures regarding procurement of sensitive items relating to currency, had recommends the waiver of customs duty on imported machinery for bank note paper production and printing, and the establishment of a single agency at the National Level to coordinate the activities of intelligence, law enforcement and investigating agencies dealing with the FICN menace. Minister of State in the MHA, Jitendra Singh, in a written reply to a question in the Rajya Sabha (Upper House of Parliament) on December 11, 2011, disclosed that the MHA had constituted a Terror Funding & Fake Currency Cell (TFFC) in the NIA in 2010 to focus on Terror Funding and Fake Currency cases. The NIA, as of now, is investigating five FICN related cases.
Despite these, as well as several other security and administrative measures, and the very significant arrests and recoveries of the recent past, there appears to be no respite from uninterrupted FICN inflows into India. Relentless flows from Pakistan, and Islamabad’s unwavering intent to support terrorism and promote every possible form of instability within India, have easily neutralized the limited gains of every Indian initiative till now. It remains to be seen whether New Delhi will be able to find the means, and more importantly, the capacities and capabilities, to push the Pakistani game plan to failure.
Ajit Kumar Singh
Research Fellow, Institute for Conflict Management
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