How to identify the illegal money transfer company (Hundi) in Australia?

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August 9, 2021

If you are a Nepali in Australia who doesn’t know how to distinguish whether the Money Transfer Company (MTCs) is legal or illegal, then we have put together a simple guide for you to identify Hundi.

Most Nepali MTCs in Australia are still using the informal fund transfer (IFT) system called HUNDI.

But, you all might not know what exactly is Hundi. So, first, let’s discuss – What is Hundi?

Hundi is an informal system of remittance where the money exchange takes place outside the banking channels. Hundi is illegal in Nepal. Nepal Rastra Bank (NRB) does not recognize hundi as a remittance transfer channel. Anyone found involved in Hundi transactions in Nepal is liable to punishment.

Ironically, Hundi agents have legally registered money transfer companies here in Australia. Hundi agents don’t use legal banking channels to send money to Nepal. Instead, they send it via a third country through a network of people and by the time it reaches the receiver’s hand in Nepal, it travels through the international nexus of money laundering. The hundi process is invisible as you won’t see the money being moved. However, the value associated with that money will be transferred between networks of people in different countries using an underground banking system. Hundi poses a serious threat to the national economy of Nepal, encourages tax evasion and also harms the governance and foreign exchange reserves.

Although illegal, Hundi is rampant among the Nepali community in Australia. According to NRB, the total legal remittance to Nepal from Australia, from Feb 2020 to Oct 2020, was around Rs 25 billion, which accounts for only about 3.58% of the total remittance Nepal receives from overseas.

However, with more than a hundred thousand Nepali living in Australia, the total remittance to Nepal from Australia should be much higher than this. This proves a large part of remittance that enters Nepal from Australia still goes through the illegal channel (Hundi).

Total Remittance to Nepal (Feb 2020 – Oct 2020)

Countries Total Rs (million)Share (%)
United States of America                           146,020.520.84
India                             78,207.011.16
Qatar                             75,631.710.79
Saudi Arabia                             73,328.710.46
United Arab Emirates                             73,137.610.44
Malaysia                             66,732.89.52
Japan                             55,069.27.86
Others                             33,595.14.79
Korea                             33,413.44.77
Australia                             25,064.83.58
Kuwait                             15,795.12.25
United Kingdom                             14,385.72.05
Bahrain                             10,426.31.49
Total                           700,807.8100
Source: Nepal Rastra Bank

Over the years, there have already been many incidents of Hundi scams among the Nepali community in Australia. Victims were mostly young vulnerable Nepali students who were attracted by the higher exchange rate that Hundi agents offered. The hundi agent collected the money here in Australia but never delivered it to the recipient in Nepal.

According to NRB, in recent years, Nepalis in Australia are increasingly using former channels to send money home, but, a significant amount of money still goes through Hundi.

How to identify Hundi?

PayRu Remit has set out a guide for you all to recognize which money transfers are Hundi which is as follows:

  • Hundis are registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC) in Australia but not with Nepal Rastra Bank in Nepal.
  • Hundis won’t have any bank or remittance company as their payout partner in Nepal.
  • Hundis offer a higher exchange rate, usually $3-$4 higher than what you get with registered/legal remit.
  • Most Hundis operate through social media – Facebook, Whatsapp, Viber etc. and won’t have a website or app. Nonetheless, you need to be very careful because few of the Hundis do have websites and apps, nowadays.
  • Hundis share their higher exchange rates every day on social media and chat groups to lure customers.
  • Hundis offer a special rate if you send a large sum of money.
  • Hundis keep changing their bank account details to remain under the radar from AUSTRAC.

Don’t risk your hard-earned money for the sake of a high exchange rate.

Try Australia’s most reliable and trustworthy Money Transfer Company, PayRu Remit, to send money to Nepal.

Sign up today and send money without paying the service fee. Download the PayRu app on iOS or Android and enjoy our market-leading rate.

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