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Smuggling in India Report 2024-25 126

Cryptocurrency in Smuggling

The use of cryptocurrency in smuggling has surged in recent years, with stable-
coins like USDT increasingly replacing traditional hawala networks. These digital
assets enable faster and anonymous settlement, minimal oversight, and weak
anti-money laundering (AML) compliance. Crypto wallets, often anonymous and
accessible via VPNs, facilitate off-the-book illicit payments, including for
under-invoiced and misdeclared imports allowing smugglers to evade customs
duties and taxes, and other regulatory requirements. The pseudonymous nature of
cryptocurrencies such as Bitcoin allows fraudsters to conceal their identities, hin-
dering detection and enforcement.

In gold and narcotics smuggling, sale proceeds are either hawala-transferred or
sent as cryptocurrency to masterminds abroad.

Case 1: DRI busts gold smuggling syndicate using crypto-ha-
wala channels

In July 2024, DRI uncovered a transnational gold smuggling syndicate
involving 108 kg of foreign-origin gold, routed through the Indo-China
border using mules and porters. Once the gold reached Delhi, it was sold
through jewellers and forex dealers, and the proceeds—over ₹108
crore—were remitted to China via hawala and USDT crypto wallets, evad-
ing formal scrutiny.

The Chinese mastermind used multiple crypto wallets, layering
funds for anonymity, and communicated via encrypted Apps
like WeChat using VPNs. Forensic analysis of chats, trans-
action hashes, and wallet IDs corroborated the smug-
gling trail, marking a significant breakthrough in
crypto-hawala detection by DRI.

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