The police teams that investigated Undiyal and Hawala money transactions have been able to reveal information about over 80 people who provided facilities to exchange foreign currency through these informal methods.
It was reported that most of the people involved in these illegal transactions are Muslim businessmen.
Police internal sources said that they are investigating a poultry businessman who exchanges about 50,000 US Dollars daily.
‘Sri Lanka Mirror’ learns that the suspect is misusing a license issued by the National Gem and Jewellery Authority of Sri Lanka, to exchange currencies.
It was also revealed that such persons exchange foreign currency through informal methods such as Undiyal and Hawala using cryptocurrency.
Meanwhile, ‘Sri Lanka Mirror’ also learnt that this aforementioned businessman had been living in Kuwait but had returned to Sri Lanka while a financial investigation was being conducted against him in that country.
In addition, police are also looking for information about five people in the areas of Kelaniya, Wattala, Dematagoda and Aluthkade where money is frequently exchanged.
USD 10 million traded daily
According to the Financial Intelligence Unit (FIU) operating under the Ministry of Finance, more than USD 10 million are being received illegally on a daily basis through Hawala and Undiyal systems.
Information has also revealed that these illegal money transactions originate from Italy, UAE, England, Canada, Australia as well as many other European countries.
How does it work?
Undiyal and Hawala are methods of transferring money between two or more countries without the intervention of a bank or other formal financial institution. These methods operate through a network of people spread across many countries.
As an example, let’s take four persons: A (sender of money), B (Undiyal or Hawala broker in the country where A lives), C (Undiyal or Hawala broker in the country where the recipient lives), and D (the recipient of money).
Accordingly, A and B live in one country while C and D live in another.
A gives B the amount to be sent to D. Later, B gives C the amount given by A. C gives the amount to D in the currency of the respective country.
There are also instances where B gives the relevant amount to D from the deposits in his bank account maintained in the country where D lives, without the intervention of a person like C.
These transactions are based on a secret passcode or a mere description without any document or other form of recording.
In these transactions, there is no physical exchange of money across borders, and there is no intervention of a bank or other authorized money exchange agency.
A special police unit
According to the Central Bank of Sri Lanka (CBSL), the significant reduction in the amount of foreign exchange received by the country is the main reason for the worsening economic crisis.
Transferring money outside the banking system using methods such as Undiyal and Hawala has significantly affected the amount of foreign exchange.
Taking these facts into consideration and at the request of the Governor of the Central Bank, the Inspector General of Police recently took steps to appoint a special police unit under the Illegal Assets Investigation Division to conduct investigations into incidents of money exchange through illegal methods.
The Sectoral Oversight Committee on Alleviating the Impact of the Economic Crisis has instructed the Department of Samurdhi Development to conduct a quick survey to identify other poverty-stricken families who need to be empowered.
This was taken into discussion when the Sectoral Oversight Committee on Alleviating the Impact of the Economic Crisis met in Parliament on Sep. 19 chaired by MP Gamini Waleboda Member of Parliament.
Commenting further, the Member of Parliament stated to the officials of the Department of Samurdhi Development to appoint a Committee together with the Ministry of Finance, the Welfare Benefits Board and the Department of Census and Statistics to take the necessary measures.
The discussion was held with the aim of reviewing the goals of the Department of Samurdhi Development to reduce the impact of the economic crisis and the current plans to achieve those goals in the year 2024.
The officials of the Department of Samurdhi Development, who presented the facts, mentioned that at present there are more than sixteen hundred thousand Samurdhi beneficiary families. Accordingly, the department has planned to empower forty-one hundred thousand families in the two years from 2024 to 2026.
The Chair reminded the officials that the responsibility of empowering all families who are affected by the economic crisis and those who are not is entrusted to the Department of Samurdhi Development. The Committee also ordered the Department of Samurdhi Development to immediately prepare a plan to eradicate poverty within the next five years.
The Leader of the Opposition – Sajith Premadasa, addressing the Committee, pointed out the dire need to first establish technical definitions to identify poverty.
The Committee also discussed about the proposed number of new employees in the department, which has been presented in relation to the future plans of the Department of Samurdhi Development. The Committee Chair pointed out that the sacrifices made by the officers of the Department of Samurdhi Development Department during the Covid pandemic cannot be forgotten. The Chair instructed the officials of the Management Services Department to take into consideration the work done by them in the past while approving the proposed number of new employees. Accordingly, the Committee ordered the Management Services Department to come to a final decision about the proposed staff of the Samurdhi Development Department within two weeks and to approve it.
The Committee also discussed the people who have not yet received their pension due to the retired officials of the Samurdhi Development Department and the related reasons. The Chair asked the officials of the Department of Pensions to arrange for the payment of the basic pension to the employees who have not yet received their pension.
The Cabinet has approved a proposal to amend the Inland Revenue Act No. 24 of 2017, the Government Information Department said.
It has been proposed that it is appropriate to amend the Inland Revenue tax to enable to request tax relief by any charity establishment that provides health facilities to children with disabilities in the society joined hands with government health services / education system and that is established as a legitimate institution prioritizing the well–being of the differently-abled children in society while being established as a legitimate institution or registered under any law enforced for registering social services organizations.
Accordingly, the Cabinet approved the resolution prepared by the acting Minister of Finance, Economic Stabilization and National Policies to direct the Legal Draftsman to draft a Bill to amend the Inland Revenue Act including legal provisions.
The Cabinet has granted approval to establish a National Debt Management Institute.
It has been emphasized in the supplementary Budget of 2022 the importance of the establishment of a State Loan Management Institute as an institutional reformation while enhancing loan management and transparency has been recognized as a prioritized sector even under the appropriation loan facility of the International Monetary Fund (IMF).
Government said that technical assistance has been rendered by the IMF and the World Bank in order to establish the proposed state loan management institute.
The loan management reformation plan, loan management institutional framework and legal framework have been planned by now.
Accordingly, the Cabinet approved the resolution tabled by the acting Minister of Finance, Economic Stabilization and National Policies to direct the Legal Draftsman to draft the Bill of the State Loan Management Act.