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The Minister of State for Home Affairs, Hansraj Ahir, announced that demonetization has led to the quick end of high-quality counterfeit currency notes printed in Pakistan, which has negatively impacted hawala operators. Ahir stated that the demonetization of Rs. 500 and Rs. 1000 bank notes has had a significant positive impact on many violent incidents in the country, including stone pelting in Jammu and Kashmir. He added that the majority of terrorist funding is in the form of illegally held cash, and after demonetization, most of the cash held by terrorists became worthless.
According to Ahir, the Indian Government's decision to demonetize high denomination notes of Rs. 500 and Rs. 1000 has caused disconcert among Left Wing Extremism (LWE) formations. LWE cadres tried to minimize their losses by depositing the money into the accounts of sympathizers or in the accounts of simple villagers on the basis of threats and coercion. Instances of such deposits have been reported in Jharkhand, Chhattisgarh, Bihar, Odisha, Maharashtra, Andhra Pradesh, and Telangana.
Security forces seized nearly Rs. 97.75 lakh from various LWE groups in Bihar, Chhattisgarh, Jharkhand, and Telangana during demonetization, as per inputs received by the Government. LWE affiliates also undertook protests against the demonetization decision, as reported by Ahir. To coordinate with the Financial Action Task Force (FATF), the Indian Government has established a Combating Financing of Terrorism Cell (CFT Cell) in the Ministry of Home Affairs (MHA).
According to Ahir, the National Investigation Agency (NIA) has also set up a terror funding and fake currency cell to concentrate on terror funding and counterfeit currency cases. To keep a check on the inflow of foreign funds, various agencies, such as the Financial Intelligent Unit and regulatory and enforcement agencies under the Ministry of Finance, will be involved. The State Government has implemented a surveillance mechanism to monitor cases of foreign and suspicious funding, including Hawala and cases under the Prevention of Money Laundering Act.
In summary, the demonetization of high denomination bank notes has had a positive impact on reducing violent incidents and curtailing illegal activities such as terrorist funding and counterfeit currency operations. The Indian Government has implemented several measures to ensure the inflow of foreign funds is adequately monitored and controlled, and surveillance mechanisms are in place to monitor suspicious funding.
