Businessmen involved in Undiyal transactions revealed

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.