Dhanusha, September 17
A 24-year-old man has been arrested in Dhanusha on suspicion of involvement in hundi transactions worth more than Rs 1.34 billion over the past two years.
Ajay Kumar Mukhiya of Shahid Nagar Municipality-4 is currently in the custody of the District Police Office, Dhanusha.
A joint team from the Central Investigation Bureau (CIB) of Nepal Police and the District Police Office arrested Mukhiya from Shahid Nagar-4 at around 5:20 pm on Tuesday.
According to CIB Senior Superintendent of Police Anupam Shamsher Rana, police began investigating Mukhiya after receiving information that he was involved in large-scale hundi transactions.
Police examined transactions in his personal and business bank accounts and found that he had carried out transactions worth Rs 1.347 billion through hundi, based on preliminary investigation.
The amount was identified from transactions conducted through the banking system alone. Police believe the total amount could be significantly higher because hundi transactions are also carried out in cash.
Rs 1.5 billion in two years
The CIB launched a detailed investigation after receiving information about Mukhiya’s alleged involvement in hundi transactions.
Police arrested him after collecting evidence that they said corroborated the information.
“Preliminary investigation shows that he has been involved in hundi transactions for the past two years. We have found evidence of large-scale hundi transactions during this period,” SSP Rana said.
According to investigators, the group primarily conducted hundi transactions linked to Malaysia. Transactions targeting other Gulf countries have also been identified.
Allegedly hired to carry out transactions
Police say Mukhiya was not the owner of the hundi operation despite the large volume of transactions linked to him.
An investigation officer said Mukhiya appeared to have been used as a hired person to carry out transactions on behalf of others.
“Preliminary investigation shows that Mukhiya was not the owner but was being used on a hired basis. It appears that he carried out hundi transactions in return for a fixed payment,” the officer said.
Police suspect that other individuals own and operate the hundi network. However, those alleged owners have not yet been arrested.
The CIB said its investigation is continuing to identify other people involved in the operation and trace the alleged owners of the funds.
How does hundi work?
Hundi can involve both domestic and cross-border transactions. Authorities consider cross-border hundi particularly challenging because it can prevent foreign currency that should enter Nepal from being recorded through formal channels.
Such transactions can contribute to discrepancies in remittance flows and can facilitate the illegal transfer of capital out of the country.
In some cases, money transferred abroad through illegal channels can later enter Nepal through other routes, including as purported foreign investment, potentially providing a channel for money laundering.
Hundi can also be used to facilitate financial transactions linked to criminal activities and to conceal the movement of illegally obtained money.
What does the law say?
Section 125 of Nepal’s National Penal (Code) Act prohibits hundi transactions.
The law defines hundi-related transactions as transferring or settling money or value between Nepal and foreign countries, or receiving or making payments through individuals, instruments or channels other than institutions or payment instruments recognised under prevailing law.
The law also prohibits receiving or making payments in a manner that conceals the actual accounts of a commercial transaction.
A person convicted of conducting hundi transactions can face confiscation of the amount involved and any property acquired or increased through the proceeds, along with imprisonment of up to one year.
