New Delhi: The rapid rise of crypto-hawala is emerging as a serious concern for security and enforcement agencies, with digital channels increasingly replacing the traditional hawala system that relied on personal trust and informal networks.
While the purpose of such transactions remains unchanged, concealing the origin and destination of funds, the method has shifted to technology-driven platforms that make transfers appear routine and harder to detect. Officials say this transition has significantly complicated efforts to track illicit financial flows.
Agencies note that crypto-hawala is now widely used by drug traffickers and money laundering networks. Despite regular narcotics seizures based on improved intelligence inputs, tracing the financial trail behind such operations has become far more difficult.
“In traditional hawala transactions, there was at least an intermediary to identify and question. With digital transactions, it is harder to pinpoint individuals,” an official explained.
According to the Directorate of Revenue Intelligence’s Smuggling in India Report 2024-25, there has been a marked increase in crypto-hawala activity. The report highlights that stablecoins such as USDT are steadily replacing conventional hawala channels.
Intelligence Bureau officials indicate that a large share of crypto-hawala transactions is linked to proceeds from narcotics smuggling. These funds are either laundered or diverted to support arms trafficking networks.
Officials further point out that drug cartels, including those linked to the Dawood Ibrahim syndicate and groups operating from Myanmar, have benefited from the shift to crypto-based systems. There are also concerns that such channels are being used to finance activities aimed at inciting violence, particularly in parts of the Northeast.
With elections underway in several states, agencies have intensified surveillance of suspicious digital transactions. Officials warn that funds routed through crypto-hawala could be used to mobilise individuals or groups to disrupt the electoral process.
Investigators stress that tracking financial flows remains central to tackling organised crime and terror networks. Past operations in Jammu and Kashmir demonstrated that dismantling hawala funding channels played a key role in weakening separatist activities, following sustained efforts by the National Investigation Agency and the Enforcement Directorate.
However, crypto-hawala presents a new set of challenges. Transactions conducted through encrypted wallets, often routed via VPNs, allow perpetrators to remain largely anonymous.
In response, agencies are strengthening their technical capabilities. Advanced blockchain forensics, specialised analytical tools, and closer inter-agency coordination are now being deployed to trace digital transactions.
The Directorate of Revenue Intelligence has also expanded its use of blockchain analytics, describing it as a critical step in addressing the growing threat.
Officials acknowledge that the fight against crypto-hawala is still evolving. With gold smugglers, narcotics networks, terror groups, and financial fraud operators increasingly adopting such methods, enforcement agencies remain on constant alert.
(IANS)
