NEW YORK: US said that India has turned into a hub for supply of funds to terrorists due to its network of ‘Hundi’ and ‘Hawala’ system of funds remittances. This was stated in the US State Department report available on Sunday. US report quoting Reserve Bank of India said that an amount of $42.60 billion was remitted to India during 2007-2008.
Analysts said that during the same period an amount in the range of $13-17 billion were remitted through Hawala Market, a parallel system of the legal one. Report said that India on priority should cooperate in those international efforts aiming at making the parallel systems of remittances transparent in view of the Hawala Market directly linked to the supply of funds to the terrorists. Hawala system is a result of several factors, such as poor banking infrastructure, global migration, economic crimes, and political corruption. It gained global notoriety after it was suspected that the September 11, 2001, attacks on the United States were carried out with the money that was transferred from the Middle East through Hawala. Since then US has started monitoring this system. By understanding the larger sociocultural, economic, and historical framework, the model of Hawala can be applied to other forms of informal banking that could eventually help in regulating these systems without alienating immigrant and refugee populations.
US State Department report said that India should take up effective law making for combating money laundering and halting the supply of funds to terrorists. India was asked in the report to work for becoming a full member of inter-governmental organization, Financial Action Task Force, which formulates policies for this purpose.