Ludhiana has remained under the spotlight over the alleged operation of hawala network having roots in various countries. Central agencies and the police have busted major networks running hawala rackets in the past and have also arrested hawala operators.Despite the action, the hawala network continues to flourish in the industrial town, the reason being that the big fish could not be arrested and they continued to operate without fear.In May this year, the Ludhiana Police Commissionerate had busted what it described as its “largest-ever” cyber fraud racket, arresting 132 persons, including three hawala operators from Ludhiana. The accused were allegedly involved in running fake call centres that targeted foreign nationals through pop-up scams, remote access software and bogus bank-security alerts.According to the police investigation, some members of the racket were based in Europe and North America, while key players were operating from Delhi and Gujarat. The accused were allegedly earning about Rs 35 crore per month, with about 40 per cent of the money being diverted to India through hawala rackets operated by three operators from Millerganj. The money was then diverted to key players in Delhi and Gujarat.Police also froze 300 bank accounts, most of them allegedly mule accounts, having more than Rs 16 crore.Within a month, the police busted another network in June which was being operated in different parts of the city and arrested 11 persons involved in the illegal money transfer racket. The investigation revealed that the hawala operators had links in India and abroad.Some of the operators had even set up fake firms to facilitate hawala transactions and issued duplicate receipts. They were also found to be using Aadhaar cards of residents to carry out illegal money transfers, police said.Hawala channel used in ISI networkIn August 2026, Ludhiana police arrested 20-year-old Rashpal Singh, a resident of Sarafkot in Gurdaspur district, for allegedly working at the behest of Pakistan’s ISI. Police said Singh had rented a shop on Ferozepur Road, about six km from the Army depot at Baddowal.According to police, Singh received about Rs 3 lakh to Rs 4 lakh through a hawala channel operating from Dubai. His associates, Rohit Masih and Varinder Masih, were also allegedly recruited by the ISI and received money through hawala operators.“ISI handlers exploited the hawala network to send money to their recruits in Punjab. The investigation is still on to identify the hawala channel which was being run from Dubai at the behest of ISI handlers sitting in Pakistan,” said a police official.Betting syndicates also rely on illicit money channelsLudhiana has also been associated with IPL betting networks, with investigations indicating the use of hawala channels and mule bank accounts to move betting proceeds.Police have arrested two alleged couriers working for an IPL betting syndicate who were accused of routing illicit funds through a network of mule accounts. Investigators found that the accounts had allegedly been obtained from poor and needy people by offering them Rs 10,000 to Rs 20,000.Interestingly, the big players involved in this network were not arrested by the police.2012: DRI busts Rs 1,000-crore alleged hawala racketThe use of hawala channels in Ludhiana is not new.In 2012, the Directorate of Revenue Intelligence (DRI) had busted a hawala racket involving more than Rs 1,000 crore. The case came to light during an investigation into a Ludhiana-based exporter who had allegedly used inflated bills to misuse the Union Finance Ministry’s duty drawback scheme and gain incentives worth Rs 60 crore.’Hawala transactions have grown significantly’Former Enforcement Directororate Deputy Director Niranjan Singh, who had led the ED probe in the money laundering and NDPS Act cases against Majithia from 2013 to 2017, told The Tribune that a few decades before, hawala operators used to involve in few lakh rupees which have now surged to thousands of crores in the recent years.Prior to 2000, Foreign Exchange Regulation Act (FERA) was strict but after the implementation of Foreign Exchange Management Act(FEMA), agency could not do much than to initiate trail. “FEMA is a civil law, meaning violations result in monetary penalties and seizure of property equivalent in value rather than criminal incarceration.There is no arrest power in FEMA. During my tenure we used to invoke power under Conservation of Foreign Exchange and Prevention of Smuggling Activities Act1974(COFEPOSA) under which accused can be detained for minimum period of one year but now this power is not being used by agency in every case,” added Singh.Singh believed that it is the failure of government that hawala has not been kept on priority which has direct impact on economy and violations are treated as civil offence and cases run for 10 to 20 years in courts and penalties are levied in minimal cases only.“I still remember in 2013 I caught a hawala racket of more than 1000 crores being run by Happy Forex in Jalandhar and see the lackadaisical approach of department, decision could not be done for years. Even in 1994 I had seized 15 kg gold from near Jalandhar and confiscation in the case is yet to be done despite decades passed,” asserted Niranjan Singh.Meanwhile, former ED officer said police can only give input to ED if they catch any hawala racket and cannot conduct investigation at their own.