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South India is fast becoming a fake currency hub

March 11, 2011 17:06 IST

Pakistan is flushing Tamil Nadu amd Karnataka with counterfeit currency to fund terror activities in the country, reports Vicky Nanjappa.

The drug cartel in Tamil Nadu and the radicalisation underway in Kerala have prompted terror groups from the across the border to pump in fake currency down south. Recently, there were reports stating that groups such as the Al Qaeda were routing a lot of money for terror-based operations through south India.

Investigators have seized fake currency to the tune of nearly Rs 18 crore from south India in the recent past. And the numbers have been on the rise. While Rs 8 crore was seized in 2009, last year fake notes amounting to Rs 10 crore were seized, a clear indication of the flourishing money racket in south India, say investigators.       

Terror groups shifted their operations base to south India owing to the high security presence along the Nepal, Pakistan and Bangladesh borders. These borders were once considered the safest routes to pump in counterfeit currency into India. It took a while for security agencies to bust this network and although they have not entirely succeeded, they have managed to curb these illegal operations along the borders to a large extent.

Reports by the Intelligence Bureau suggest that fake currency will be now be routed through the southern states. The currency is being circulated out of Tamil Nadu and Kerala into Andhra Pradesh and Karnataka. The money is picked up from these places by agents and then distributed to other parts of the country, IB officials said.

With almost all terror organisations having set up base in Kerala, it was the favoured choice of anti-social elements. But what has baffled investigators is the increasing inflow of counterfeit currency into Tamil Nadu.       

A recent arrest of two drug peddlers in Bengaluru revealed how south India had become a hub for narcotics trafficking and money-laundering. The peddlers confessed that they operated in Chennai, but further investigation brought to light that the police had zeroed in on the small fry.

The Tamil Nadu capital is the headquarters for the trade in date rape drugs, which is controlled by the drug mafia from Goa. The hand of a Russian mafiosi and fugitive underworld don Dawood Ibrahim is also suspected, say investigators. 

The involvement of the Inter-Services Intelligence too cannot be ruled out. The spy agency is heavily banking on the fake currency racket to facilitate money-laundering since there has been a major crackdown as far as black money is concerned.    

It is a known fact that $ 1.5 trillion worth of black money has been stashed away by Indians abroad and the Indian government is making efforts to bring it back. A large part of this money was used for terror operations, but at the moment there has been a freeze. This has slowed down terror financing and the ISI is not looking a expanding the fake currency business, say insiders.

Pakistan is flushing India with fake currency and arms through the drug trade. A similar practice was adopted when drugs were smuggled in through the Nepal border, an investigating officer said. The drug peddlers double up as cross-border currency smugglers.

Another trend among smugglers is that they are no longer labourers and other workers who took to the business to earn a quick buck. Most smugglers today are educated and well-spoken, say insiders.  

Investigations have shown that the currency notes are printed in Pakistan and flushed into the Indian market from Gulf nations and Dubai. Since the similar route is used by the drug mafia operating from Pakistan and Afghanistan, sources say it's this criminal network that exchanges counterfeit currency for genuine notes.    

The fake currency racket in south India was first exposed with the arrest of KM Abdullah. The police had recovered Rs 2.5 crore in fake currency from this Dubai-based criminal. His arrest was the tip of the iceberg, which later brought to the limelight the racket in south India.

To bust this network the IB has approached police officials from the southern states. The Goa police will have to play a more important role since the drug mafia is based there. The police have to look for possible links with terror operatives, say IB officials.   
Vicky Nanjappa in Bengaluru