Going off the rails

Welcome back, and may I wish you all a happy and peaceful 2017.

India has certainly been in the money laundering news lately, what with its “demonetisation” of the most common banknotes on 8 November 2016 and the subsequent arguments about whether this move has helped, hindered or simply bored the criminals.  And now it seems that money launderers (and many citizens trying to get rid of their no-longer-worth-anything banknotes) are targeting that most Indian of institutions – the railway.

It appears that from 9 November 2016 – when the 500 and 1,000 rupee notes were declared no longer to be legal tender – the number of 2,000 rupee notes supposedly received and recorded by railway booking counters did not tally with the number of these notes deposited at the end of each day.  Instead, the shortfall was made up of the (supposedly no longer valid) 500 and 1,000 rupee notes.  For instance, on 16 November one booking counter at Chennai supposedly received thirty-five 2,000 rupee notes from customers – but at the end of the day, it deposited not a single one, instead paying in fifty 1,000 rupee notes and forty 500 rupee notes.  Indeed, from this single counter alone, demonetised notes worth a total of 800,000 rupees (about £9,535) were deposited over a fortnight.  Across all forty counters at Chennai station, demonetised notes worth 10,000,000 rupees (£120,000) were paid in.

It seems that the railway booking counters had been left out of the demonetisation plans and were not told to stop accepting the 500 and 1,000 rupee notes, and consequently found themselves as one of the few places where people could still spend them.  The suspicion is that it was being done in an organised way, with staff colluding with criminals to allow them to buy tickets with useless money and get refunds later, or sell the tickets on.  One railway booking counter employee at Chennai said that for the middle two weeks of November is was a “free-for-all” with every railway staff member, including senior officials, exchanging their own demonetised banknotes and bringing in wads of them on behalf of friends and family.  Railway compliance staff – known in India as the “vigilance department” – are now examining huge amounts of data to look for evidence of criminal involvement and organisation rather than simple opportunism.

It occurs to me that with my local season ticket from Cambridge going up to a wince-inducing £4,780 this year, it might be a useful laundering technique here in England.  I doubt that the ticket counter staff are trained in AML and the dangers of accepting large cash payments, so I could turn up with £5,000 in cash, buy a ticket, and then ask for a refund a couple of weeks later, taking a small loss (as launderers always do) and walking off with a cheque.  You heard it here first…

This entry was posted in AML, Money laundering and tagged , , , , , , , . Bookmark the permalink.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s