Illegal Money Transfers Remitted In India

India has been listed among the countries where illegal money transfers are remitted by a "booming" black-market banking network in Germany.

Illegal "underground banking" networks are being used in Germany for payments to countries as Albania, India, Iran, Russia and Turkey and the Kosovo province, according to Germany's banking supervisory authority known by its German acronym Bak-Red.

The chief of Bak-Red Michael Findeisen said the amount of such illegal transfers "even exceeds official transfers in the wake of the "dramatic increase" in illegal underground banking in Germany.

This "underground banking system" most often takes place 'secretly' among certain immigrants and ethnic groups, Findeisen said, adding, that it leaves no traces.

After opening 284 investigations on proceedings last year against non-banks that transferred funds for customers to recipients abroad, the federal banking authority already expects 500 new cases this year, he said.

According to Bak-Red, immigrants often use illegal money-transfer channels by placing their money unnoticed in certain import shops, travel agencies, grocery or telephone stores.

Interestingly, Bak-Red has found that "big name German industrial companies also use such channels to obtain the purchase price for capital goods quickly and without exchange-rate losses."

Such illicit transfers offer cost advantages for customer because the remittance service is simply "organised" and is useful in countries with exchange-rate controls and fluctuations, the banking authority said.

It said the majority of these transactions are carried out within 24 hours and although there are no receipts, underground banking offers customers more security than when using official paths of payment to licensed banks in places like Russia and some Asian countries.

Any written traces of such transfers are coded so that outsiders may not view them, the authority said while noting that in western Europe, such clandestine services are even advertised in foreign-language newspapers.

Findeisen noted that international surveillance of money laundering forced "a portion of bank's customers. Turn to underground financial services". Tax evasion is also a reason for the expansion of such illegal financial dealings, he said.

He cited the German Banking Act to state that whoever offered money-transfer services without permission is committing a criminal offence.

Findeisen said underground banking is expanding in the very regions with the most modern and expansive money-transfer and clearing networks.