There have been arguments that the demonetization hasn’t been able to check black money hoarders; rather the decision to scrap high-value currency notes has hit the poor and middle-class Indians extremely hard.
Reports about a child dying because of the hospital refusing to accept scrapped currency notes only prove their arguments right.
On the other hand, the actual target of the demonetization move barely had any impact on black money hoarders as they found many ingenious ways to convert their black money into white overnight.
So how did they do it?
Donating your black money to temple hundis has emerged as a great way to turn your black money into white.
The government has already clarified that temple hundis will not be asked any questions regarding their donors. Therefore, black money hoarders can easy donate their money to temples anonymously, and the temple authorities will exchange it for new currency notes, keep a commission on it and return the rest of the money back to the donor.
Sounds too good to believe?
According to sting operation by ABP News, the priest of Govardhan temple in Mathura agreed to convert Rs. 50 lakh of black money into white with a 20% commission on it.
Watch the Sting Operation
Co-operative banks and credit societies usually perform a lot of activities manually, and according to reports, many of these institutions allegedly indulge in money laundering.
Owners of black money will usually open multiple back-dated fix deposits in the name of villagers. Once they receive new currencies, they will offer these villagers in a cut on the money received and keep the rest.
Using Poor People as Mules
Since the government has said no questions will be asked to depositors if the deposit amount is up to Rs. 2.5 lac, a lot of black money hoarders are using poor people to deposit their black money.
Afterward, the depositors withdraw the money, keep some to themselves and return the rest to the black money hoarders.
Of course, this requires the depositor to be trustworthy, which is why the black money hoarders reply on their staff or close relatives only.
Giving Loans to Poor People
A lot of people are giving interest-free loans to people whose bank account state is least likely to arouse any suspicion. This is a win-win for both the borrower as well as the lender.
Finding Jan Dhan Account Holders
Remember Jan Dhan Yojan the PM had started in 2014? According to reports, quite a few Jan Dhan accounts have shown fat deposits since demonetization. Again, the money launderers use Jan Dhan account holders as mules for converting their black money into white.
A large number of Jan Dhan accounts have almost no transactions since they were opened. The KYC-verified account holders can deposit up to 1 lac rupees while non-verified account holders can deposit up to Rs. 50,000.
Approaching the Banknote Mafia
Black money hoarders can adopt any or all of the methods above to convert their black money into white. But there are many who don’t really want to get involved directly.
This is exactly where the banknote mafias have emerged to their rescue. As per reports, the banknote mafias usually keep 15% to 80% of the value for accepting Rs. 500 or Rs. 1000 currency notes.
Paying Advance Salaries
Many businesses carrying black money is following this ingenious method. As per a report in Times of India, many businesses have created salary accounts for their employees and to deposit less than Rs. 2.5 lac in order to evade scrutiny. They will deposit old currency notes (as advanced salaries) until December 30 after which they can withdraw new currencies.
Booking Training Tickets
Since the govt said old currency notes would be accepted for booking train tickets, there was a sudden rise in the booking of expensive train tickets. Many people booked train tickets only to cancel them later in order to get refunds in form of new currency notes. Even though the railways said the refunds won’t in cash, people who had used travel agents to book tickets got their money in new currencies.
As soon as there was an announcement for demonetization, many black money hoarders rushed their nearest ornament shops to buy gold, as a result of which the rate of gold shot up dramatically. According to reports in Times of India, between 8PM and 12AM, gold worth crores of rupees had already been bought in back-dated transactions. This prompted the govt to ask top jewelers to give details of their transactions.