Several importers and traders who dealt with suspected hawala operator Mohammed Farooq, 39, for importing consumer durable goods from China are under the scanner of the Enforcement Directorate (ED) for allegedly violating foreign exchange laws.
Meanwhile, the scam has ballooned to Rs5,000 crore from Rs2,253 crore after the ED traced more proceeds of the crime.
Farooq was held in connection with foreign remittances worth Rs2,253 crore and involving 13 companies.
The agency on Monday arrested him from Chhatrapati Shivaji International Airport under the Prevention of Money Laundering Act, before he could fly to Dubai.
“Some importers and traders used to take the help of Farooq for illegally remitting money abroad after importing consumer durable goods China such as toys, mobile phone accessories, perfume and other goods,” said a senior officer privy to the investigation.
“If the cost of a product is Rs100, the importers will undervalue it, say to Rs10, to save taxes,” said the officer. “However, the rest Rs90 has to be illegal sent abroad. It is this transfer which was facilitated by Farooq for a share.”
Financial transactions to Dubai and Hong Kong are under scanner of the agency.
Based on a tip-off, two locations in South Mumbai were searched by the ED where he was not found. Farooq was finally traced to the airport. The agencies are also probing the underworld links.
The ED said 13 companies remitted approximately Rs2,252 crore funds to overseas destinations by submitting non-existent and forged import documents to banks during 2015-16.