TRANSNATIONAL ORGANIZED CRIME: THE INDIAN PERSPECTIVE

Shankar Pratap Singh*

I. A BRIEF OVERVIEW acceleration of the globalization process cannot be brought under control unless Today, a criminal considers the world various governments coordinate the as his field of operation. He commits a strategies and policies at the national crime in one country, deposits the money level with the strategies, policies and derived from criminal activities in an regulations issued at the international offshore bank in another country and level. takes refuge in yet another country. The widespread political, economic, social and technological changes as well as II. ORGANIZED CRIME—THE variations in legislation, procedures and INDIAN PERSPECTIVE policies in different countries on mutual Criminal gangs have been operating in assistance in criminal matters have India since ancient times. There is no allowed organized crime groups to firm data to indicate the number of become increasingly active in the organized criminal gangs operating in the international arena. International country, their membership, their modus criminal organizations are taking full operandi and the areas of their advantage of globalization of world operations. Thousands of organized markets, dismantling of trade barriers, criminal gangs operate in the the increased ease of international travel, countryside. Their structure and liberalized emigration policies, high-tech leadership patterns may not strictly fall communications equipment and in the classical Italian Mafia module. sophisticated money laundering They may sometimes be operating in techniques to enhance and further their loose structures, but the depredations of criminal efforts and to forge alliances such criminal gangs are too well known to with other criminal groups. They are be recounted. However, the purpose of engaged in such felonious activities as organized crime in India, as elsewhere in illicit drug trafficking, money laundering, the world, is monetary gain and this is the use of violence and extortion, acts of what makes it a formidable force in corruption, trafficking in women and today’s socio-political set up. children, illicit manufacturing of and trafficking in firearms, environmental In India, organized crime is at its worst crime, credit card fraud, computer related in Mumbai, the commercial capital of the crime, illegal trafficking of stolen country. The first well-known organized vehicles, industrial espionage and gang to emerge in recent times was that sabotage, maritime piracy, etc. The of Varadharajan Mudaliar in the early problems raised by the current sixties. His illegal activities included illicit liquor, gold smuggling, gambling, * Deputy Inspector General of Police, Anti- extortion and contract murders. Three Corruption Cell III, Central Bureau of other gangs emerged shortly thereafter, Investigation, India namely, Haji Mastan (gold smuggling),

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Yusuf Patel (gold smuggling) and Karim paid in foreign countries through Lala (drug smuggling). During the “Hawala”. Land Mafia has political emergency in 1975, when there was a connections and indulges in land crackdown on the Indian Mafia, new grabbing, intimidation, forcible vacation, gangs emerged. Dawood Ibrahim, the etc. Of late, the ganglords of Mumbai most successful, came in conflict with the have started using Delhi as a place for Pathan gangs of Alamzeb and Amirzada hiding and transit. Chhota Rajan group is which led to bitter internecine gang strengthening its base in Delhi. warfare. The Pathan gangs were liquidated to leave the field free for Ahmedabad city has been a hotbed of Dawood Ibrahim. In 1985, there was liquor Mafia because of a prohibition increased police pressure which made policy (banning of liquor). The Mafia Dawood Ibrahim flee the country. In became synonymous with the name of March 1993, Dawood Ibrahim was behind Latif, who started in the mid-seventies as the serial bomb blasts in Mumbai in a small time bootlegger and grew up to which 257 persons died and 713 were set up a 200 strong gang after eliminating maimed. Public and private property rivals with intimidation, extortion, worth several million rupees was kidnappings and murders. He won destroyed. Investigation revealed the municipal elections from five different transnational character of the conspiracy, constituencies with strong political the objective of which was to cripple the patronage. He was killed by the police in economy, create communal divide and an encounter in 1997. spread terror in the commercial capital of India. Dawood Ibrahim, Tiger Memon A boom in construction activities in and Mohammed Dosa are presently Bangalore city has provided a fertile reported to be operating from Dubai. breeding ground for the underworld. Their field of activity primarily extends to Builders are used for laundering black extorting money from builders and film money. Forcible vacation of old disputed producers, mediating in monetary buildings is a popular side business for disputes, and undertaking contract the underworld. The local gangsters in killings. The other major gangs of the State of Karnataka have connections Mumbai indulging in organized crime are with the underworld of Mumbai. One of those of Chhota Rajan (Drug Trafficking the Mumbai gang operations here is the and Contract Killings), Arun Gawli Chhota Rajan gang. (Contract Killings and Protection Money), Late Amar Naik (Protection Money) and Brief profiles of three major Choota Shakeel. transnational organized criminal groups are as follows: Organized crime exists in other cities too, though not to the same extent as in A. Dawood Ibrahim Gang Mumbai. There are several gangs Dawood Ibrahim group is the most operating in Delhi from neighboring dreaded mafia gang with countrywide State of Uttar Pradesh indulging in network and foreign connections. He has kidnapping for ransom. Om Prakash stationed himself in Dubai since 1985 and Srivastava, alias Babloo Gang of Uttar has indulged in drug and arms Pradesh, has been responsible for trafficking, smuggling, extortion and organizing kidnappings in Delhi and contract killings. His brother Anees Mumbai in which ransom amounts were Ibrahim looks after smuggling, drugs and

571 RESOURCE MATERIAL SERIES No. 59 contract killings, Noora looks after film channel). The power of this gang has financing and extortion; and Iqbal is in dwindled after his arrest. charge of the legitimate business which includes stock broking in Hong Kong. III. ILLICIT DRUG TRAFFICKING Anees is in legitimate business too, managing the Mohd. Anees Trading Illicit drug trafficking is the most Company in Dubai. His business significant transnational organized crime interests in India are shopping centres, which has become a serious issue hotels, airlines and travel agencies in confronting both developing and Mumbai with an annual turnover of developed countries. In most countries, about Rs.20000 million. Extradition of despite years of drug suppression and offenders from Dubai has not been prevention efforts, the cycle of drug possible since there is no extradition trafficking and drug abuse continues. If treaty with Dubai. Moreover, some of allowed to remain unabated, the drug these offenders have strong social links menace will considerably destroy the with politicians and other top quality of life of people and hamper personalities in Dubai. countries in their social, economic and cultural development. B. Chhota Rajan Gang Chhota Rajan was a member of the India is a vast country with land Dawood gang but parted company after borders extending over more than 15000 the 1993 serial bomb blasts in Mumbai. kilometers and a sea coast line of over He raised his own gang in 1994–95 which 7000 kilometers. India’s narcotic problem is reported to have a membership of needs to be visualized from its several hundred persons today. Chhota geographical situation. India is flanked Rajan himself is in a foreign country to on either side by two regions which are avoid elimination by the Dawood gang. internationally acknowledged as major His gang indulges in drug trafficking and sources of illicit opiates namely, South- contract killings. In collaboration with West Asia (Afghanistan and Pakistan) another local gang, he organized the and South-East Asia (Myanmar, Laos, killing of a trusted leader of the Dawood Thailand). Additionally, Nepal, a Ibrahim gang, Mr. Sunil Samant, in traditional producer of cannabis, both Dubai in 1995. herbal and resinous, fringes the country in the North. C. Babloo Shrivastava Gang Om Prakash Shrivastava in Babloo India is a traditional producer of licit Shrivastava is facing 41 cases of murder, opium for medicinal and scientific kidnappings for ransom, etc. He was purposes. It is grown in three states, arrested in Singapore in April 1995 on namely, Uttar Pradesh, Rajasthan and the basis of a Red Corner Notice issued by Madhya Pradesh under official control of INTERPOL and extradited to India in Narcotics Commissioner. A part of the August 1995. He has since been in jail but licit opium enters the illicit market in his gang continued to indulge in different forms. Although opium organized kidnappings and killings. The production is strictly under Government ransom amount is received by them in control in India, illicit poppy plantations foreign countries through hawala have been reported in some places. (alternative non-banking remittance Besides, there is illicit cultivation of opium in the hill tracks of some states.

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India has a large presence of chemical Bangladesh. In the early eighties, the industries producing precursor materials Border State of Punjab became affected like acetic anhydride, acetyl anthranilic with narco-terrorism with the smuggling acid, etc. for lawful purposes. These of narcotic drugs and arms from across chemicals are also utilized for processing the border. This was also the time when and manufacturing heroin. The illicit the drug Mafia emerged in Golden cultivation of opium as well as the Crescent countries. precursor chemicals can be used for the manufacture of heroin. For the last Although the use of India by the drug several years, India has also become a traffickers as a transit country has base for the manufacture of heroin, resulted in an increase in drug abuse due particularly in and around the opium to the spill-over effect, drug addiction in producing districts of Uttar Pradesh, India has not assumed such a serious Madhya Pradesh and Rajasthan. magnitude as in some of the western countries, but there are no grounds for The illicit drug trade in India has complacency. There have been reports of centered around five major narcotic drug use among the students of substances namely heroin, hashish, universities in Delhi, Mumbai, Calcutta opium, herbal cannabis and and Chandigarh. Indian society is not methaqualone. The Indo-Pak border has agitated too much. It is customary in traditionally been the most vulnerable to some places to consume Bhang (crushed drug trafficking. Drug trafficking through leaves of the cannabis plant) on the India consists of hashish and heroin from popular festival of Holi. There is no such Pakistan, hashish from Nepal, white tolerance for charas or ganja which also heroin from Myanmar and heroin from derived from the same cannabis plant.

1. Quantities of the most common drugs and precursors seized in India during the years 1997 to 2000

Quantities seized in kilograms Name of the drug/precursor 1997 1998 1999 2000 Opium 3,316 2,031 1,635 2,524 Morphine 128 19 36 37 Heroin 1,332 655 861 1,198 Ganja 80,886 68,221 40,113 94,682 Hashish 3,281 10,106 3,391 4,923 Cocaine 24 1 1 0.08 Methaqualone 1,740 2,257 474 1,095 Acetic Anhydride 8,311 6,197 2,963 1,337

2. Details of significant seizures of Regional Unit seized 17,900 kg narcotic drugs and psychotropic heroin from a truck at octroi post. substances made during 2001 The suspected source of the seized (i) On 5 January 2001, the Directorate drug was Pakistan and it was of Revenue Intelligence, Amritsar concealed in three packets kept in a

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cabinet in a driver’s cabin and 15 The Government of India have taken packets in an LPG cylinder lying in various legislative, administrative and the tool box on the roof of the truck. preventive measures to counter drug (ii) On 8 February 2001, the Narcotics trafficking in the country. Among the Control Bureau, Mumbai Zonal Unit prominent legislative measures are the seized 1423.690 kg of mandrax provisions of deterrent punishment under tablets from a truck at the premises the NDPS Act, 1985, applications of of M/s High Point Industries, MIDC, preventive detention of drug traffickers Taloja. under the Conservation of Foreign (iii) On 17 April 2001, the Directorate of Exchange and Prevention of Smuggling Revenue Intelligence, New Delhi Activities Act, 1974 (COFEPOSA), seized 17.000 kg of heroin at notification of certain chemicals like National Highway No.8, opposite acetic anhydride as a ‘specified item’ Shiva temple, Delhi-Gurgaon Road under the Customs Act, 1962 and India’s when the occupants of two vehicles land border with Myanmar falling within were transferring the drug from one the territories of the States of Arunachal vehicle to another. The suspected Pradesh, Nagaland, Manipur and source of the seized heroin was Mizoram having been declared as South-West Asia. ‘specified areas’ under the said Act for the (iv) In the first week of August, 2001, the purpose of checking illegal trafficking Directorate of Revenue Intelligence, across the border. The creation of the New Delhi seized two tonnes of Narcotics Control Bureau as an apex hashish from two godowns in coordinating and enforcement agency at Mordabad, near Delhi. It is the the national level is one of the prominent biggest ever seizure in Northern administrative measures taken by the India. The hashish was brought from Government. Nepal, where it was processed initially for over a period of 2 to 3 The Narcotic Drugs & Psychotropic months. The bundles of 200 to 300 Substances (NDPS) Act, 1985, which was kgs of hashish were brought hidden enforced with effect from 14 November in a mini luxury bus over a period of 1985, provides for a minimum 3 to 4 months, and stashed away in a punishment of 10 years’ rigorous godown in Mordabad. The bundles imprisonment and a fine of one hundred were then covered in polythene bags, thousand Rupees extendable to 20 years wrapped with aluminum foils, rigorous imprisonment and a fine of two vacuum-packed and the bundles hundred thousand Rupees. In respect of shifted to another godown nearby. repeat offenses, the Act provides for the The machine used in vacuum death sentence in certain circumstances. packing was also recovered. A total of In remaining cases, a minimum 4,000 packets, each containing 500 punishment of 15 years rigorous gms of hashish in cake form, were imprisonment and a fine of Rs.1.5 recovered. The vacuum-packed hundred thousand, which is extendable hashish concealed in packages of up to 30 years rigorous imprisonment and handicrafts was to be transported to fine of three hundred thousand Rupees. Mumbai docks and then shipped to The courts have been empowered to the United States. impose fines exceeding the above limits for reasons to be recorded in their judgments.

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The N.D.P.S. Act also provides for: and supporting illegal activities of organized criminal groups. (i) Constitution of a National Fund for Control of Drug Abuse to meet the In India, the states of Punjab which expenditure incurred in connection were affected by terrorist activities with the measures for combating during the 1980s and Jammu & Kashmir illicit traffic and preventing drug have been particularly vulnerable to abuse. arms trafficking across the border. India (ii) Control over chemical substances has a long border with Pakistan, Nepal, which can be used in the Bhutan, China, Myanmar and manufacture of narcotic drugs and Bangladesh. The Border Security Force, psychotropic substances through which guards the borders, continues to appropriate licensing and deterrent seize large quantities of AK Series rifles, punishment for violation thereof. heavy machine guns, pistols and (iii) Total ban on suspension, remission revolvers, rocket launchers, rifles, or commutation of sentences under magazines and ammunition. the penal provision. (iv) Forfeiture of all illegally acquired In 1993, a consignment of AK-56 rifles, properties derived from or magazines, live rounds and hand attributable to illicit trafficking. All grenades was sent from a Gulf country by enforcement agencies have been land at the cost of Dighi Jetti in the State empowered to trace and freeze/seize of Gujarat. Subsequently, huge quantities such property as are liable to of arms, ammunition and explosives were forfeiture under the Act, subject to smuggled into India by sea route at confirmation within a period of 30 Shekhadi in District Raigad. These were days by the competent authority used for bomb blasts in Mumbai on 12 appointed under this Act. The law March 1993, which caused terror, applies to all properties and assets of widespread damage, loss of 257 lives and traffickers acquired within a period maiming of 713 persons. During of six years immediately preceding investigation, some of the arms recovered the date on which such a trafficker is included 62 AK-56 rifles with 280 charged with an offense under this magazines and 38,888 rounds, 479 hand Act. grenades, 12 pistols of 9 mm make with ammunition, 1100 electronic detonators, India is one of the few countries in 2313 kgs. of RDX, etc. which an adequately deterrent penal system has been developed with regard to The Police Authorities in the state of drug trafficking. This is in conformity Madhya Pradesh in central India with the UN Resolutions of 1961, 1971 recovered 24 AK-56 rifles, 5250 and 1988 on Narcotic Drugs and cartridges, 81 magazines and 27 hand Psychotropic Substances. grenades on 4 November 1995.

On 17 February 1996, Delhi Police IV. ILLEGAL FIREARMS recovered 361 pistols of 0.30 caliber with TRAFFICKING the inscription “Made in China by Firearms trafficking is a global Norinco”, 728 magazines and 3738 live phenomenon and generally resorted to for rounds in a cavity in the undercarriage of generating profit, purchasing narcotics a caravan bus. In this case, a Swiss

575 RESOURCE MATERIAL SERIES No. 59 national and an Iranian national living in V. HUMAN (WOMEN AND Pakistan since 1981, were detained and CHILDREN) TRAFFICKING the investigation disclosed that this in Emigration of human beings from one fact was the second consignment, the first country to another for trade, commerce, one having been successfully smuggled religious and other purposes is as old as into India in 1995. 22 persons including human civilization itself. However, the five foreign nationals have been word ‘traffic in human beings’ implies prosecuted in the court of law in this case. illegal movement of people from one country to another in violation of existing A sensational case called the Purulia national laws and procedures. The arms drop case was an example of illicit countries of the West have become highly arms trafficking by air. On 17th vulnerable on this count as they are December 1996, an Antonov 26 aircraft attracting hoards of illegal emigrants dropped over 300 AK47/56 rifles and mainly because of their relative economic 20,545 rounds of ammunition, dragnov prosperity. Illiterate, innocent and sniper weapons, rocket launchers and gullible persons from under developed night vision devices in Purulia village in and developing countries, in their urge to West Bengal. The aircraft was bought earn more money from overseas from Latvia for US$2 million and employment, fall easy prey to chartered by a Hong Kong registered unscrupulous and unauthorised agents. company Carol Airlines. Payments were Such activities in India have turned into made mostly from foreign bank accounts. a lucrative business as the agents induce/ The aircraft picked up a consignment of make the immigrants part with large arms from Bulgaria using end-users sums of monies towards their certificate issued by a neighboring commission/service charges, expenses on country. The arms were airdropped over journeys as well as for arranging Purulia in the state of West Bengal. passports, visas and statutory clearance. Often the travel documents are not valid This case was investigated by the and sometimes they are simply dumped Central Bureau of Investigation and a into foreign lands without giving them charge sheeted in the City Sessions promised employment. Court, Calcutta. After trial, the court found the accused persons guilty of India has also been significantly offenses under the Indian Penal Code, affected by such immigrants. India is Explosive Substances Act, Arms Act, found to be both the country of origin and Explosives Act, and the Aircraft Act and destination for trafficking in women. sentenced Mr. Peter James Gifran Van According to intelligence reports, about Kalkstein Bleach (British National), Mr. 1200 thousand emigrants from Alexander Klichine, Mr. Igor Moskvitine, Bangladesh have settled in the border Mr. Oleg Gaidash, Mr. Evgueni States of West Bengal and Assam after Antimenko, Mr. Igor Timmerman (all independence. The problem, however, has Latvian nationals) and Mr. Vinay Kumar spread as far wide as Mumbai, Rajasthan Singh (Indian national) to various terms and Delhi, which have an estimated 300 of rigorous imprisonment on 2 February thousand emigrants from Bangladesh. 2000. Similarly, a large number of Indians are working abroad, particularly in the Gulf region. A number of young girls from

576 119TH INTERNATIONAL TRAINING COURSE PARTICIPANTS’ PAPERS southern India have been sent to the Gulf seized from Peat in 1991 have made their countries. There have also been reports way onto the Web. that India has served as a transit point for trafficking of young virgins from On December 16, 2000, a Swiss couple Nepal, Myanmar and Bangladesh to the William and Loshier Marty, who were Middle East, mostly Dubai. part of an international paedophile racket with operations in the West, Thailand, An estimated 5,000 to 7,000 Nepali Sri Lanka and India were arrested at a girls are annually sold into brothels in resort in Madh Island, Mumbai with two India for prostitution. According to a minor girls. According to the police press report, 9 Nepalese girls aged sources, photos of the couple’s victims— between 14 and 25 years, were rescued at some as young as seven—were supplied Nepal-India border point at Kakarbhitta to paedophiles rings and were also posted in Eastern Nepal in September, 2000. on the Web. The internet has facilitated The rescued girls said that they were the organization of paedophiles, who can lured by the agents on the pretext of now easily down load pictures, forward getting them married or obtaining jobs them to friends, enter chat rooms and for them in India. According to another pick out targets and eventually lure them press report, the Nepal police arrested into a meeting. one Dhan Bahadur Gurung in November, 2000 on charges of selling more than 300 Another site came into the focus of women and girls. He is accused of luring CBI’s Cyber Crime Investigation Cell them into prostitution by falsely during routine surfing. The site sold itself promising marriage and jobs in the as a platform for those who would like to circuses in India. In early 2001, an buy or sell sex slaves. In business since emigration racket, in which a nexus of 1998, it offered members a sickening policemen deployed at the Hyderabad variety of slaves: virgin, black, teen, airport and travel agents facilitated more pregnant and more. A membership fee than 3,000 people sneaking out on fake could be waived if a person tortured a papers, came to light when nearly 40 slave and sent in photographs. The CBI women mostly illiterate were being sent set up a decoy customer and were to the Gulf countries from Hyderabad promptly offered a teenage girl. The site’s airport on fake papers. pimp was learnt to be operating from cybercafes in Delhi. At the last minute, Paedophiles now have a titillating new however, he backed out of the deal and tool—the Internet. It allows them to remained untraceable. access pornographic photographs of children, enter their homes, and ‘groom’ India’s first case of child porn on the them for rape. The first case of Net came to notice last year. The site in paedophilia appears to have come to light question had a deceptively innocent in India in April, 1991 when the police homepage. But persist with the links and raided the house of Father Freddy Peat, the site brought out 27 files with titles who had been running an orphanage in such as “Little bitches on the beach” and Goa, and recovered drugs and 2,305 “All in the family”. By paying a little more photographs of children forced into sexual one could watch the “VIP series” and acts. Peat was arrested and later customized videos. Most of the girls sentenced for life. It is believed that featured were under 10 and South Asian. copies of a large number of pictures Investigation reveals that the site was

577 RESOURCE MATERIAL SERIES No. 59 created in Lima, Peru. But its domain amended by enacting the Emigration Act, server was being provided by Arvind 1983 which repealed the earlier Act of Shyam Jagdam from Hyderabad. Jagdam 1922. In order to protect and aid, with was arrested in September, 2000. advice, all intending emigrants, a Information was sought from Peru police provision was made for the appointment but the response is still awaited. An of a Protector-General of Emigrants and interesting fact revealed during Protector of Emigrants by the Central investigation was that the naked children Government. The Act prohibits a shown on the site were missing from their recruiting agent to commence or carry on homes. the business of recruitment except under, and in accordance with, a certificate Child-porn sites showcase India as a issued on that behalf by the Prosecutor- paedophile’s paradise. However, most General of Emigrants or any other officer Indians still discount child porn on the notified as registering authority under net as a western perversion. Paedophilia the Act. It further prohibited an employer and more so its prevalence online is still to recruit any citizen of India for not a priority crime for the police in India. employment in any country or place The Indian mind set is such that few are outside India except through a recruiting willing to accept that their children can agent competent under the Act to make be at such risk. such recruitment or in accordance with a valid permit issued on this behalf under India has sufficient legislation to deal the Act. effectively with the problem of Suppression of Immoral Traffic as well as The Act provides for a punishment of illegal emigration out of India. The imprisonment for a term which may be Suppression of Immoral Traffic in extended to two years and with a fine Womens and Girls Act, 1956 to deal with which may extend to two thousand these offenses, was re-enacted under the rupees for contravening the above name of Immoral Traffic (Prevention) provisions or collecting, from an Act, 1986 to rectify some lacunae in the emigrant, any charges in excess of the earlier Act. limits prescribed under the Act or cheating any emigrants, etc. All offenses The National Commission for Women under the Emigration Act, 1983 are reviews laws, conducts inquiries for cognizable. redressal of complaints, undertakes promotional research for policies, advises V. MONEY LAUNDERING the Government and ensures custodial justice for women. The Commission Crime pays and criminals naturally enjoys the powers of a Civil Court by want to be able to enjoy their profits virtue of Section 10(4) of National without worrying about the police or the Commission for Women Act, 1992. It has courts. This is not a new economic or formed an Expert Committee and has sociological problem. However, geo- formulated a 10-year National Plan of political developments over the past 50 Action (1997–2006) to coordinate with the years together with economic 9th and 10th Indian Five Year Plans. globalization have meant that the international movement of money has The law relating to emigration of increased. The rapid expansion of citizens of India was consolidated and international financial activity has gone

578 119TH INTERNATIONAL TRAINING COURSE PARTICIPANTS’ PAPERS hand-in-hand with the development of derived from criminal activities or in transnational crime, which takes violation of the country’s legislation. advantage of political borders and Underground banking which conveys a exploits the differences between legal sense of a system may not strictly cover systems in order to maximise profits. The misuse of banking channel. It may refer groups involved are genuinely to, in a restricted manner, a system of multinational and pose a direct threat to rendering services which are similar to the financial stability of economic banking services, the most important in systems. They destabilise democracy this context being the transmission of because they are backed by clandestine money. Hawala represents such services. networks subject to the law of the underworld. As a developing nation, India feels seriously concerned not only because Money laundering cannot be money laundering, including disassociated from other forms of crime. compensatory payments known as It is a fact that it thrives on corruption. HAWALA transactions, have been Corrupt people use financial techniques threatening the economy but also because to hide their fraudulently obtained assets such practices contribute to the country’s and the continued successful application illicit drug trafficking and terrorist and of these techniques depends on the subversive activities leading to large involvement of influential accomplices. scale violence. Money laundering is therefore at the centre of all criminal activity, because it Of late, an impression is gaining is the common denominator of all other ground that India is becoming criminal acts, whether the aim is to make increasingly vulnerable to money profits or hide them. laundering activities and is becoming a transit point for drug traffickers and Laundering operations are, in fact, other criminals from the Golden Crescent intended more to conceal the origin of the i.e. Pakistan, Afghanistan and Iran and money than its criminal nature, in other the Golden Triangle i.e. Burma, Thailand words to hide the traffic from which it is and Laos. The Economic Intelligence derived rather than the general criminal Council meeting of August, 1993 also activity which actually generated it. It is observed that money laundering is now a therefore essential to move the money in major issue and has become a means of order to scramble the route it takes. The financial clout and strength of economic operation is wholly successful when the offenders and drug traffickers. India is nature of the money is also concealed and fast becoming a conduit for the South it is impossible to establish a link with East, Middle East, Far East and Latin any criminal activity because the American countries. The Indian hawala different circuits taken give it the system or underground banking is used appearance of legitimate income. extensively for drug trafficking and remittances of money by both non- The Indian “Hawala” or “Hundi” resident Indians and resident Indians. system can be explained as a transfer of money through unofficial channels, In 1992–93, there were press reports normally outside the banking channels on the U.S. State Department’s used by businessmen. The money so investigations into the possible use of transferred often includes the money Indian Banking Channels for laundering

579 RESOURCE MATERIAL SERIES No. 59 drug money, including the possibility of over-invoicing and double invoicing links with the securities irregularities of legitimate business and foreign 1992. An article in the London Times of remittances. Non-resident Indians have May, 1993 had suggested that India, been given some special banking more specifically Bombay, was attracting facilities. These facilities are misused to huge amounts of Narcotics money from bring back the money as white money. drug cartels in Columbia. For example, a portfolio account is opened in a foreign country and the money is There were also, in 1994, reports in the laundered back to be invested in the stock press that the private sector in India is markets. Another modus operandi is to making its presence felt in the area of launder the money through bogus quick transfer of cash across continents. exports. The conversion of black money is Travel agents and courier companies are done by over-invoicing the products. targeting Indians living abroad who want Some shell companies are setup to issue to repatriate money. As no minimum/ bills or invoices accompanied by bogus maximum limits are prescribed, the time transport receipts in order to obtain taken to transfer money is much less. As funds against these documents from such private companies do not fall within bank/financial institutions and then the direct control of the banking system, divert major parts of such proceeds by it could perhaps lead to the facility being issuing cheques in the names of non- used by money launderers, though there existent front companies of cheque is no such case reported so far. discounters. The cheque discounters then hand over cash immediately to the party The high tax rate and the Exchange after deduction of their commission. The Control Regulations (though now cheque discounters are generally considerably liberalised) have been the associated with commodities markets major reasons for hawala and other where fake transactions in commodities economic crimes in India. The Indian can largely go unnoticed. The cheque hawala system or underground banking discounters also issue fake Letters of is used extensively for drug trafficking Credit and false bills. The cheque and remittances of money by both non- discounters file income tax returns in resident and resident Indians. It is the which the commission is shown as Hawala where the economic offenders taxable income. and the launderers meet. These offenders easily become prey for money launderers, Money laundering per se has not been or it can be said that these offenders on made a criminal offence in India so far. the one side and the money launderers on Certain activities like diversion of funds, the other side close the circle. submitting false statements relating to inventories, multiple financing etc. which In India, money laundering is also could serve as means towards the end of indulged in by some corporate houses to money laundering are also not considered evade taxes as well as by the organized as crimes. The problem had so far been criminal groups to launder dirty money. dealt with mainly under the Foreign Money laundering techniques include Exchange Regulation Act, 1973, but with smurfing, establishment of front effect from June 2000, FERA has been companies, acquisition of commercial and replaced by the Foreign Exchange non-commercial properties, remittances Maintenance Act. A bill to enact a money through Hawala (non-banking channels), laundering law to be named ‘The

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Prevention of Money Laundering Bill’ has proceedings for forfeiture have been been introduced in Parliament by the initiated has been made punishable, also Government of India but the same still as a distinct offence (Sec. 68-Y of NDPS remains to be enacted as law. Money Act, 1985). laundering has been proposed as a cognizable crime punishable with To deprive persons of the proceeds and rigorous imprisonment of 3–7 years benefits derived from the commission of which could be extended to 10 years and a an offence against the law of the land fine of up to Rs. 0.5 million. The including forfeiture or confiscation of acquisition, possession or owning of such property, Indian legislation also money, movable and immovable assets include the following Acts: from crime, especially from drug and narcotic crimes, would be tantamount to (i) Criminal Law (Amendment) Ordi- money laundering. Concealment of nance, 1944; information on proceeds or gains from (ii) Customs Act, 1962 (Secs. 119 to 122); crime made within India or abroad is (iii) Code of Criminal Procedure, 1973 proposed to be an offence. An (Sec.452); adjudicating authority is proposed which (iv) Smugglers & Foreign Exchange would have powers to confiscate Manipulators (Forfeiture of Property) properties of money launderers. An Act, 1976; administrator may be appointed to (v) Narcotic Drugs & Psychotropic manage the confiscated assets. An Substances Act, 1985 (Secs. 68-A to appellate tribunal is proposed to be set up 68-Y); with three members to hear appeals from (vi) In addition, Indian statutes also the orders of the adjudicating authority. contain provisions for preventive The rulings of the adjudicating authority detention of foreign exchange would thus not be contestable in the local racketeers under the Conservation of courts. Financial institutions are Foreign Exchange and Prevention of expected to maintain transaction records Smuggling Activities (COFEPOSA) and furnish these to the adjudicating Act, 1974, and of the drug traffickers authority. Failure to do so would be under the Prevention of Illicit Traffic punishable too. in Narcotic Drugs and Psychotropic Substances (PITNDPS) Act, 1988. However, at present, there is certain legislation to deal with such offenders. In one of the cases of money laundering Such legislation is specifically intended to dealt with by the Central Bureau of deprive offenders of the proceeds and Investigation, an organized group of benefits derived from the commission of Hawala dealers operating from London offences against the laws of the country. and Dubai used to receive remittances Besides, such legislation also provides for from foreign banks for transferring the the confiscation or forfeiture of the same to India. A telephonic message in proceeds or assets used in connection coded words would be passed to agents in with the commission of certain crimes. In India to pay money in Indian currency. the offences relating to narcotic drugs The remittances so received by the above and psychotropic substances in mentioned persons in Dollars or Pounds particular, the very act of acquisition of Sterling at London and Dubai were used property derived from or used in illicit for purchase of gold, drugs, arms, trade and in relation to which ammunitions and explosives through the

581 RESOURCE MATERIAL SERIES No. 59 underworld. The arms, ammunitions and been listed as criminal offences under explosives were used to be smuggled into this Act. Amendments have also been India and sold to various criminal/ made to the Indian Penal Code, Indian terrorist groups while the drug used to be Evidence Act, the Bankers’ Book distributed to the traffickers. Evidence Act and Reserve Bank of India Act to facilitate investigation and prosecution of cyber crime. VII. CYBER CRIME The exponential growth of computer- The Central Bureau of Investigation related crime commensurate with the has recently created a Cyber Crime increasing dependence of computers in Research & Development Unit which our day-to-day lives has posed new maintains close liaison with international challenges to the law enforcement agencies like the FBI, Interpol and other agencies in India. With the physical foreign police agencies to share skills and growth of the Internet over the past few techniques in investigating cyber crimes. years, a number of new generation crimes The officers of CBI associated in this affecting the LAN, WAN and Internet exercise share their expertise with the have created extraordinary situations. State police forces through regional Hacking, computer network breaches, training programmes held periodically. copyright piracy, software piracy, child pornography, password sniffers, credit VIII. CURRENCY card frauds, cyber squatting are some of COUNTERFEITING the new terms in the average criminal investigator’s dictionary. Highly Currency counterfeiting is one of the intelligent persons commit these new organized white collar crimes which has generation crimes leaving hardly any assumed serious proportions globally. It trace and making investigation highly not only causes serious setbacks to the difficult and complicated. Recently, one of world’s economy but also jeopardizes the the hurdles in the investigation of genuine business transactions. computer-related crimes in India was Nowadays, the counterfeiting of currency overcome by the enactment of legislation notes is done with the help of modern in the form of the Information Technology equipment such as colour scanners, Act, 2000, which came into force on colour copiers and printers, as well as by October 17, 2000. offset process. Most of the security features are copies from genuine notes by The Act delineates two separate types using modern techniques to produce the of penal provisions: contraventions and counterfeit currency notes very close to information technology offences. While genuine currency notes. For achieving the contravention results in monetary required finish in the art of penalty, the IT offences may result in the counterfeiting, the advance computer offender being imprisoned or paying a technology provides them with fine or both. Tampering with computer sophistication and perfection. source codes, obscenity, hacking, unauthorized access to a protected There has been an upsurge in the system, misrepresentation before incidents of supply of counterfeit Indian authorities, breach of confidentiality and currency notes from across the border of privacy, publication of false particulars in India especially from the Indo-Pakistan digital signature certificates, etc. have border and Indo-Nepal border. During

582 119TH INTERNATIONAL TRAINING COURSE PARTICIPANTS’ PAPERS the year 1999, counterfeit Indian full cooperation to all other countries for currency notes valued at Rs.18.4 million eliminating or containing to the furthest were seized as compared to Rs.6.5 million extent possible, the counterfeiting of during 1998 indicating a threefold domestic as well as foreign currencies. increase. During the year 1999, the three Indian laws and enforcement measures States of Uttar Pradesh, Bihar and West are in full conformity with the principles Bengal accounted for almost 40% of the laid down in the Convention. The Indian total seizures. There are two recent cases Penal Code provides for punishment of of recovery of counterfeit Indian currency life imprisonment or imprisonment for up notes which have international to 10 years for counterfeiting any ramifications: currency note or bank note, using as genuine, forged or counterfeit currency (i) In January, 2001, the Uttar Pradesh notes or bank notes and making or Police, with the arrest of a suspected possessing instruments or materials for ISI agent, identified as Abal, from forging or counterfeiting currency notes. Muzaffarnagar District, busted a It also provides for punishment of gang responsible for circulating fake imprisonment up to 7 years for possession currency notes across Western Uttar of forged or counterfeit currency notes or Pradesh, Delhi, Haryana, Rajasthan bank notes. The making or using of and Punjab. Currency notes worth documents resembling currency notes or Rs.17,000/- in the denominations of bank notes is also an offence punishable Rs.500/- and Rs.100/- were seized with a fine. The investigation of cases from Abal. involving counterfeit currency is done by (ii) In March, 2001, the Mumbai Police, specially trained staff of the State Police. in one of the biggest hauls, seized At the national level, the Central Bureau counterfeit currency notes worth of Investigation has created a separate Rs.15 million in two separate cases. unit to take up the investigation of Ten persons linked to a Dubai-based offences of counterfeit currency which notorious ISI agent Aftab Batki, were have inter-state or international arrested. The counterfeit notes were ramifications. of Rs.500/- denomination. The consignment had arrived from Dubai IX. SPECIAL INVESTIGATIVE by air a couple of weeks ago. The TOOLS TO COMBAT notes were concealed in water TRANSNATIONAL ORGANIZED dispensers and TV sets. After being CRIME smuggled into Mumbai, these were handed over to the Dawood gangsters The use of traditional investigative for circulation. The interrogation of methods to combat transnational the arrested accused revealed that organized crime has proved to be both they worked for Aftab Batki. The very difficult and ineffective. This police recovered from them a demands that law enforcement agencies separate consignment of fake utilise special investigative tools such as currency notes worth Rs.9 million controlled delivery, undercover meant to be supplied to certain operations and electronic surveillance businessmen in Mumbai. (wiretapping, communications interception etc.) to effectively fight India, as a signatory to the Geneva transnational organized crime. However, Convention, 1929, is committed to extend the use of these tools are often

583 RESOURCE MATERIAL SERIES No. 59 surrounded with controversy because “1. If permitted by the basic there is always public fear that they principles of their respective might infringe on human rights to domestic legal systems, the Parties privacy or are likely to be misused by the shall take the necessary measures, government to oppress citizens. within their possibilities, to allow for the appropriate use of controlled A. Controlled Delivery delivery at the international level, Controlled delivery techniques have on the basis of agreements or proven an important enforcement tool in arrangements mutually consented identifying the principles involved in to, with a view to identifying persons drug trafficking and other major involved in offenses established in smuggling offences. It is particularly accordance with Article 3, important in countering the criminal paragraph 1, and to taking legal activities of drug traffickers who, by the action against them. use of couriers, creation of false documents and other deceptive practices, 2. Decisions to use controlled carefully disassociate themselves and try delivery shall be made on a case-by- to be remote from the drug trafficking case basis and may, when necessary, operations. take into consideration financial arrangements and understandings The United Nations Conference for the with respect to the exercise of adoption of a Convention against illicit jurisdiction by the Parties traffic in narcotic drugs and psychotropic concerned.” substances has defined controlled delivery as follows: Section 4 of the Indian Narcotic Drugs and Psychotropic Substances Act, 1985 “Controlled delivery” means the provides: technique of allowing illicit or suspect consignments of narcotic 1. Subject to the provisions of this Act, drugs, psychotropic substances, the Central Government shall take all substances in Table-I and Table-II such measures as it deems necessary annexed to this Convention, or or expedient for the purpose of substances substituted for them, to preventing and combating abuse of pass out of, through or into the narcotic drugs and psychotropic territory of one or more countries, substances and the illicit traffic with the knowledge and under the therein. supervision of their competent 2. In particular and without prejudice to authorities, with a view to the generality of the provisions of identifying persons involved in the subsection (I), the measures which commission of offences established the Central Government may take in accordance with Article 3, under that subsection include paragraph-1 of the Convention.” measures with respect to all or any of the following matters, namely: Further, Article 11 of the Convention, a...... covering controlled delivery, reads as b. Obligations under the Interna- follows: tional Conventions; c. Assistance to the concerned authorities in foreign countries

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and concerned international agencies of different countries are organisations with a view to necessary make this technique effective. facilitating coordination and universal action for prevention B. Electronic Surveillance and suppression of illicit traffic in Electronic surveillance covers narcotic drugs and psychotropic wiretapping, communications interception, substances. etc. Telephone interception and the monitoring of all electronic The above provisions thus enable the communications are the most controversial drug law enforcement agencies in India to aspects of electronic surveillance. Yet these use the controlled delivery technique as are very useful in assisting law an effective tool of investigation against enforcement agencies to combat organized syndicates, nationally and transnational organized crime. internationally. However, before adopting Wiretapping or telephone interception is this technique, the originating country defined simply as the interception of a and the recipient country should discuss telephone conversation between parties in detail the entire operation, maintain without their knowledge, using equipment surveillance simultaneously in both the that is inserted into the electronic circuit countries, keep close surveillance on the between the transmitter and the receiver. movement of drugs either through cargo or through couriers, and time the final In India, interception of messages, strike operation simultaneously in both transmitted or received by any telegraph the countries to achieve maximum is covered under subsection 2 of section 5 results. It will also be necessary to of the Indian Telegraphic Act, 1885, when authenticate the evidence gathered in it is necessary or expedient to do so in the both the countries for successful interests of the sovereignty and integrity prosecution of the traffickers. of India, the security of the State, friendly relations with a foreign country or for In India, the Narcotics Control Bureau, preventing incitement to commission of the nodal agency for enforcement of laws an offence. The issue of constitutional concerning narcotic drugs and validity of this provision came under psychotropic substances, has undertaken scrutiny of the Supreme Court of India in controlled delivery operations with a a writ petition filed by the People’s Union number of countries from time to time for Civil Liberties. The Supreme Court both on its own initiative or when passed a judgment on 18th December, suitable cases are brought to its notice by 1996, upholding the constitutional other enforcement agencies. validity of the Act but laid down certain guidelines prescribing that the order for The operation of controlled delivery is interception will be issued by the Home very difficult and complicated, Secretaries at the Centre and in the particularly when it involves many States. A copy of the order should be sent countries and there is a difference in to the Review Committee within a week. their legal systems and practices. In The order will cease to have an effect using this technique, there is always a after two months unless renewed. The fear that the consignment of illicit drugs Review Committee will review the order may be lost during transit. The passed by the authority concerned within uniformity of legislation and close two months of the passing of the order. cooperation amongst the law enforcement

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The total period shall not exceed six Section 306 of Code of the Criminal months. Procedure, 1973, provides for the obtaining of evidence of an accomplice by The Government of India has made a tender of pardon subject to his voluntarily legal provision in the licensing conditions making a full disclosure of the facts and formulated along with the cellular circumstances relevant to the offence for operators to make it mandatory on the which the accomplice and co-accused are part of the cellular companies to provide being charged with or investigated for. parallel monitoring facilities for all This provision is applicable in offences communications being received and punishable with imprisonment of seven emanating from a particular mobile set. years or more. Cellular operators operating in four metropolitan cities of Mumbai, Kolkata, E. Witness and Victim Protection Delhi and Chennai have made this Programmes facility available whereas others are There is no legislation in India at bound to provide this facility within three present for protection of witnesses and years of the initiation of the mobile the members of their families. Section network. 171 of the Criminal Procedure Code prohibits police officers to carry the C. Undercover Operations complainant or witness to court. The The law enforcement agents, through intention of such legislation appears to be undercover operations, are able to to ensure independence of evidence given infiltrate the highest levels of organized by the witnesses without any influence crime groups by posing as criminals when from the police. real criminals discuss their plans and seek assistance in committing crimes. In X. CONCLUSION India, there is no legislation or regulations to undertake undercover National strategies are inherently operations. inadequate for responding to challenges that cross multiple borders and involve D. Immunity Systems multiple jurisdictions and a multiplicity Immunity refers to the process of of laws. The rapid growth in exempting from prosecution a co-accused, transnational organized crime and the in order to maximise the potential of complexity of their investigations witness co-operation as a tool for requires a global response. At present, combating transnational organized crime. the measures adopted to counter The testimony of a person, who is party to organized crime are not only a crime is very reliable because of his predominantly national, but these relationship to any co-accused. During measures differ from one country to investigation, a co-accused can reveal the another. It is absolutely imperative to true identities of other suspects, assist increase cooperation between the world’s the police in locating the victim of a law enforcement agencies and to continue crime, or point out the corpus delicti or to develop the tools which will help them body of the crime. It is a very effective effectively counter transnational tool in prosecuting terrorists or members organized crime. of criminal organisations. In India, the Extradition Act, 1962 deals with extradition of fugitive

586 119TH INTERNATIONAL TRAINING COURSE PARTICIPANTS’ PAPERS criminals. Extradition can be made if the send summons or warrants in duplicate offence is an extraditable offence, i.e., an to a court in a foreign country for service offence provided for in the extradition or execution and the said foreign court treaty with a State which is a treaty state will cause the service or execution. and for other countries, an offence which Section 166-A of the Criminal Procedure is specified under the Second Schedule of Code provides for letters of request to the the Act. Under this schedule, there are 18 competent authority for investigation in a types of offences. India has extradition foreign country. A criminal court in India treaties with Nepal, Belgium, Canada, may issue a letter of request to a court or Netherlands, the United Kingdom, the a competent authority to examine orally United States of America, Switzerland, any person supposed to be acquainted Bhutan and Hong Kong and extradition with the facts and circumstances of the arrangements with Sweden, Tanzania, case, to record his statement made in the Australia, Singapore, Sri Lanka, Papua course of such examination and also to New Guinea, Fiji and Thailand. require such person or any other person Extradition treaties with Russia, to produce any document or thing. Germany, UAE, Bulgaria, Thailand, Similarly, Section 166-B provides for France, Ukraine, Romania, Oman, Spain, letters of request from a country or place Kazakhstan, Greece, Egypt, Malaysia outside India to a court or an authority and Mauritius are under finalisation. for investigation in India. Under this provision, the Central Government may India has entered into Mutual Legal forward the letter of request received Assistance Agreements/Treaties in from a foreign country to a magistrate criminal matters with the United who may summon such person and record Kingdom (1992 agreement concerning the his statement. The Central Government investigation and prosecution of crime can also send the letter to a police officer and the tracing, restraint and who will investigate the offence. confiscation of the proceeds and instruments of crime, including currency India is a signatory to the South Asia transfer and terrorist funds), Canada Association for Regional Cooperation (1994), France (1998), Russia (1993), (SAARC) Convention for Suppression of Kyrgyzstan, Kazakhstan (all Mutual Terrorism. SAARC consists of India, Legal Assistance Agreements in Criminal Pakistan, Bangladesh, Nepal, Sri Lanka, Matters), Egypt, China, Romania, the Maldives and Bhutan. Pursuant to Bulgaria and Oman. Mutual Legal the SAARC Convention, India enacted Assistance Treaties have been negotiated the SAARC Convention (Suppression of with United Arab Emirates but is yet to Terrorism) Act. Extraditable crimes be ratified. Negotiations are continuing include unlawful seizure of aircraft; for signing treaties on Mutual Legal unlawful acts against the safety of civil Assistance in Criminal Matters with aviation; crimes against internationally countries such as Australia, Norway, protected persons; common law offences Mongolia, Turkmenistan, Bulgaria, Hong like murder, kidnapping, hostage taking; Kong, Ukraine, Uzbekistan and and offences relating to firearms, Azerbaijan. weapons, explosives and dangerous substances, etc. when used as a means to Section 166 of the Criminal Procedure perpetrate indiscriminate violence Code deals with reciprocal arrangements involving death or serious injury, or regarding processes. A court in India can serious damage to property.

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