Hawala and Informal Banking — Legal Reforms

Entry	Year	Description	Impact
PMLA Amendment Act 2019	2019	Expanded the definition of 'proceeds of crime' to include property equivalent to the value of proceeds of crime when actual proceeds cannot be located or identified. Introduced the concept of 'reporting entity' and strengthened the powers of the Enforcement Directorate in hawala investigations.	Enhanced the ability to prosecute hawala operators even when direct proceeds cannot be traced, addressing a major enforcement gap in informal banking prosecutions
FEMA Amendment 2015	2015	Introduced stricter compliance requirements for money changers and remittance services, including enhanced customer due diligence and transaction monitoring to detect hawala operations disguised as legitimate money changing activities.	Improved detection capabilities for hawala operations using money changing businesses as fronts, though enforcement remains challenging due to the informal nature of the system
UAPA Amendment Act 2019	2019	Empowered the government to designate individuals as terrorists and strengthened provisions against terror financing, including hawala-based funding mechanisms. Enhanced international cooperation provisions for combating cross-border terror financing.	Provided stronger legal framework for prosecuting hawala operators involved in terror financing, though practical implementation faces challenges due to the system's informal structure