The Enforcement Directorate (ED) has arrested seven touts in Karnataka for laundering an amount of Rs.91.94 lakh through banks for new notes, said an official on Tuesday.
"Among the accused is G. Prashanth, brother-in-law of S.C. Jayachandra, an engineer of the state Public Works Department, who was arrested on December 5 in Bengaluru for stashing Rs.6 crore in new currency and 7kg gold in his house," the ED official told IANS on the condition of anonymity.
The ED registered a case against all the accused under the Prevention of Money Laundering Act after Jayachandra revealed modus operandi of the touts in converting the demonetised notes into new currency notes.
"Based on Jayachandra's revelations during investigation into fraudulent exchange of demonetised notes into newly introduced currencies, we registered the case against him and the touts," said the official.
Referring to the organised network of supplying new currency notes in exchange of old currency, the official said the commission for laundering the money was 20-35 per cent since the note ban on November 8.
"The accused had supplied new currency to Jayachandra through Prashanth on earlier occasions and fell into our trap while making efforts to supply new notes on December 4 after sourcing them from other parts of the state," the official noted.
The accused used to cultivate householders operating savings bank accounts and entitled to draw Rs 24,000 per week to exchange the demonetised notes for a consideration.
"The modus operandi was to make the account holders deposit the old notes and withdraw the new notes for 25 per cent commission," pointed out the official.
The other means of laundering was to use collection agents of micro finance institutions to withdraw fresh currency notes from self-help groups but deposit old notes in their accounts as they have an RBI exemption.
"The accused have also misused current account holders who are allowed to withdraw Rs 50,000 per week by the RBI," said the official.