₹903 cr ‘Chinese’ hawala scam busted in Hyderabad; 10 arrested

The Cyber Crime team of the Hyderabad Police on Wednesday (October 13) arrested 10 people involved in running a ₹903 crore hawala racket across India, China, Taiwan, Cambodia and UAE, from Delhi and Mumbai.

The two prime accused were identified as Li Zhongjun, a Chinese national and Chu Chun Yu, a resident of Taiwan. It is suspected they operated the racket at the behest of their bosses in China.

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According to reports, the scammers lured investors via online investment apps. The money robbed from investors was reportedly transferred to virtual accounts and sent out of the country through authorised money exchange and forex firms.

Hyderabad police commissioner CV Anand told the media that the money defrauded by the scammers amounted to ₹10,000 crore in Delhi alone, hinting that there may be lakhs of such investors who must have fallen victim to the scam across the country.

Accused Zhongjun and Chu Chun Yu were suspected to have come to India in 2019-20 to recruit operatives in the country for the scam, but returned to China when the COVID-19 pandemic broke out, media reports quoting police said.

The arrests were made based on the complaint of a resident of Hyderabad, who alleged that he was cheated of ₹1.6 lakh after investing in an app called LOXAM.

Police during investigation found that the money was deposited into an account by the name Xindai Technologies Pvt Ltd in Induslnd Bank. Virender Singh, one of the accused who was arrested from Pune, had opened the account. During interrogation, he said he did so at the behest of a Chinese man called Jack in return for ₹1.2 lakh commission.

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Police also found another account named Betench Networks Pvt Ltd, linked to Xindai. Sanjay Kumar, a resident of Delhi, who had opened it also claimed that he was given instructions by a Chinese national. Kumar said that he had opened 15 such accounts, each for a commission of ₹1.2 lakh, and shared the details with Chun Chun Yu.

According to police, the money was transferred from Xindai Technologies to 38 bank accounts, from where it was further transferred to money exchange firms Ranjan Money Corpt and KDS Forex Pvt Ltd. Naveen Kaushik, who owns the two companies transferred the money to forex exchanges, got it converted into dollars and gave it to Sahil and Sunny who then sent it abroad through hawala.

Police said the firms owned by Kaushik received 0.2 per cent of each transaction as commission. Ranjan Money Corp conducted transactions of upto ₹441 crore in seven months while KDS Forex sent money up to ₹462 crore in 38 days.

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The scam has bared the loopholes in the regulatory mechanism of the banking system in India, especially in light of violations made by the concerned money change and forex firms which are entities authorised by the Reserve Bank of India.

The Hyderabad police which has frozen around ₹1.91 crore of the embezzled money across several bank accounts, has said that it would seek the help of Enforcement Directorate and other central investigating agencies to probe the matter.