NAMCO Bank case: ED probe reveals use of ₹5 notes as ‘identifiers’ for hawala transactions

ED's probe into ₹196 crore money laundering linked to NAMCO Bank reveals use of rare ₹5 notes for hawala, with suspects coordinating via WhatsApp

MUMBAI: The money-laundering investigation by the Enforcement Directorate (ED) into suspicious transactions worth around ₹196 crore in the Nashik Merchant Cooperative (NAMCO) Bank and the Bank of Maharashtra, both in Malegaon, has revealed that the accused used five-rupee currency notes, which are barely seen these days, as a ‘token’ or identifier for hawala transactions.

Agency officials said they had recovered hundreds of five-rupee notes from the Surat residence of B Vali Mohamed, one of the accused in the case. (Getty image)

Agency officials said they had recovered hundreds of five-rupee notes from the Surat residence of B Vali Mohamed, one of the accused in the case. The probe also revealed that the accused persons allegedly used a WhatsApp group to coordinate their activities effectively. The ED suspects that a group of 19 to 20 individual bank accounts is being used for parking funds for further withdrawals, and it is currently focussing on establishing the identities of the end users of such funds, their accomplices and at least six hawala operators.

A case was first registered on November 7 at the Malegaon Chawani Police Station in Nashik on the depositing of an estimated ₹100 crore-plus in the 14 newly opened accounts in NAMCO Bank. The case was against one S Ahmed and his accomplices who allegedly used the identity documents of various persons, obtained with false promises or paying money. The ED’s probe revealed that five similar accounts were also maintained with the Bank of Maharashtra.

The probe revealed that B Vali Mohamed and one N Shafi allegedly withdrew large sums of cash from the dummy accounts and distributed them to angadiyas (hawala operators) in Ahmedabad, Mumbai and Surat. They allegedly worked under the instructions of one M Bhagad, better known by his aliases of ‘Challenger King’ and ‘MD’.

Shafi, in his statement, allegedly revealed that he, along with Vali Mohamed, ‘MD’ and his associate ‘Jimmy’, were part of a WhatsApp group through which they received instructions from ‘MD’ and ‘Jimmy’ on transactions, withdrawal of cash, and subsequent delivery of such funds to specific individuals.

The ED suspects that the 19 or 20 bank accounts under the scanner were allegedly being used for parking funds for further withdrawals. Vali Mohamed and Shafi withdrew ₹196 crore within four to five months. Both were arrested by the ED recently.

The ED submitted its findings to a special Mumbai court recently. Vali Mohamed’s lawyers have rejected the allegations against their client in the Mumbai special court, claiming that he worked for ‘MD’ for a monthly salary of ₹33,000, and it was his employer who would ask him to withdraw cash from the bank. Ahmed and Shafi have also denied all allegations of wrongdoing.

The ED’s money trail investigation of the debit transactions from the 14 NAMCO Bank accounts and five Bank of Maharashtra accounts revealed that a majority of such amounts were transferred to 21 sole proprietary concerns. An analysis of the bank statements of the 21 accounts revealed that transactions of hundreds of crores of rupees were credited there, mostly through online banking channels, which were further transferred to the accounts of various companies. Sums running into hundreds of crores of rupees were then withdrawn in cash.

On November 14 and November 28, the ED carried out searches at over two dozen premises in Mumbai, Surat, Ahmedabad and Nashik, which resulted in the seizure of incriminating documents, digital evidence, and fixed deposits and bank balances amounting to ₹5.83 crore. The agency recently also seized cash amounting to ₹13.5 crore during searches at seven premises in Mumbai and Ahmedabad.

A scrutiny of the transactions in the 14 suspicious accounts in NAMCO Bank revealed that a majority of ‘credits’, worth around ₹118.4 crore, were allegedly transferred from the accounts of 200 dubious firms within two months in the second half of 2024. The amounts so credited were allegedly transferred to several other accounts, according to ED sources.

Debit transactions made from these 14 accounts revealed that the majority of them, worth around ₹80 crore, were transferred to various unrelated accounts belonging to 20 entities/persons. The probe also found that three fixed deposits were allegedly created in NAMCO Bank out of the funds received from various entities in the dubious accounts.

The ED’s scrutiny of the statements of the Bank of Maharashtra’s five accounts revealed that funds worth ₹53.34 crore were allegedly received from the accounts of various firms in three to four months this year. Upon the receipt of such funds, they were allegedly immediately transferred to other accounts held in the names of certain entities, ED officials said.

The branch managers of six of the bank accounts under the scanner told the ED that Vali Mohamed and Shafi visited the branches regularly to withdraw money. The role of certain bank officials is being probed by the Nashik police since the two were neither account holders nor had any authority to make such transactions.