A criminal network spanning Karachi, Dubai, Delhi, and the United States, allegedly led by brothers Altaf and Javed Khanani in collaboration with Dawood Ibrahim was dismantled following the 2016 demonetisation in India. The syndicate, involved in counterfeit currency, arms trafficking, and terrorism, collapsed almost overnight, shortly after which Javed Khanani mysteriously died after falling from a rooftop, while his brother Altaf's whereabouts remain unknown.
Khanani Family Went To Karachi From India
After Partition in 1947, there was chaos on both sides. People were abandoning their homes, property, generations of wealth, and businesses and crossing the newly formed border. The largest migration of the century was taking place.
During this time, a business family from Gujarat also arrived in Karachi, Pakistan. This family belonged to the Memon community of Gujarat. The family patriarch was Abdul Sattar Khanani. It is said that business runs in the blood of the Memon community. These people are known for their strong words and are adept at negotiation.
Abdul Sattar Khanani built his new home in Karachi. His financial situation in Karachi was not good. Despite this, Abdul Sattar decided not to take up a job but to start his own business, even if it was small.
He then opened a mobile currency exchange shop on the sidewalk of Karachi's Bolton Bazaar. People would come to him with foreign currency, and he would exchange them for Pakistani currency. This became his source of income.
On May 2, 1961, Abdul Sattar Khanani was blessed with twin sons. They were named Javed and Altaf. As they grew up, Abdul Sattar's two sons began working alongside their father. Neither of them were much educated, but they possessed sharp minds. Javed and Altaf first learned the intricacies of foreign currency exchange. Then, in the early 1980s, they took over their father's business.
At the same time, another name was rapidly emerging in the Karachi market. His name was Hanif Kalia. Kalia and Sattar were of the same age and knew each other well. Hanif Kalia also worked in currency, but in a different way from Abdul Sattar's. Kalia traded price bonds. This led to a good friendship between Kalia and Sattar.
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How Was Khanani & Kalia International Company Formed?
India had opened its market to the world. Pakistan followed suit. By the early 1990s, goods began to be imported from abroad. People began to work in other countries to earn a living. Pakistani migrant workers from the Gulf were sending significant remittances. The market was rapidly changing. Currency exchange operations saw significant potential.
The Kalia and Khanani families already knew each other. Hanif Kalia's son, Huzaifa Kalia, was carrying on his father's work. Meanwhile, Abdul Sattar Khanani's sons, Altaf and Javed, had already mastered their father's work.
The Khanani brothers wanted to expand their father's business. They needed money and networking. The Kalia family had both. The Khanani brothers spoke with Hanif Kalia and his son, Huzaifa, and explained the business plan to them. The Kalias liked the plan.
When the State Bank of Pakistan began issuing licenses to those dealing in foreign exchange and currency, Altaf, Javed, and Huzaifa jointly applied for the licenses. The Khanani brothers and the Kalia family then formed a company called Khanani & Kalia International (KKI).
KKI wasn't a large company initially. It was simply a foreign currency exchange shop in Karachi's Bolton Market. People came there to exchange dirhams, dollars, and other foreign currencies. Initially, the company focused on this. Javed and Kalia handled operations in Pakistan. Altaf was building a network in Dubai, having other intentions.
Within a few years, KKI established its presence not only in every city in Pakistan, but also in major cities like Dubai, London, New York, and Toronto. It strengthened its connections. KKI controlled more than 40 per cent of Pakistan's foreign exchange market, transacting billions of dollars annually.
From the outside, it appeared to be a successful and legitimate company, but Parallel to the foreign exchange market, a system called hawala operated.
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How Does Hawala System Work?
Someone needs to send money from Karachi to Dubai. If they send it through a bank, they'll need to provide their identity, sign, show documents, and be taxed. A record will be filed with the government, whereas with hawala, nothing like this happens. Just give the money in cash to a hawala agent in Karachi. The agent will inform his partner in Dubai, and the Dubai agent will immediately arrive with the required amount. Later, the agents in Karachi and Dubai will settle the accounts.
From Small Business To 'Money Machine'
The Khanani brothers moved money extensively through the hawala system, earning substantial commissions. Altaf had expanded his network to such an extent that even Dubai's Al-Juni Exchange became a partner of KKI.
The Khanani Brothers' network also caught the attention of powerful figures in Pakistan. Soon, politicians, officials, and big businessmen began to trust KKI more than banks, as transactions worth billions of rupees were conducted there without any paperwork.
The Khanani Brothers' network was also a good way to hide black money. KKI then began flouting all business rules and regulations.
Khanani Brothers' Meeting With Dawood
After the 1993 Mumbai bombings, Dawood Ibrahim fled India and reached Dubai. He was protected by the Pakistani intelligence agency, the ISI, to plot against India. According to some international media reports, the ISI took Dawood and D Company (Dawood's associates) to Pakistan.
Dawood was receiving vast sums of money from drugs, weapons, and extortion, but the question was how to transfer this money to his associates in other countries. Dawood needed an illegal system, not a bank, to move his money around.
That's when Dawood learned about the Khanani brothers - Javed and Altaf. When Dawood explained his plan, they immediately agreed. They even formed an organisation called the Khanani Money Laundering Organization (Khanani MLO).
Terror In India
This organisation funneled Dawood's money between locations and used it in conspiracies against India. The Khanani MLO's network stretched from Karachi's Sadar Bazaar to Dubai, Toronto, and ports in East Africa.
Balancing drug money coming from Mexico, routing terrorist funds coming from Gulf countries, settling accounts of syndicates linked to Lashkar-e-Taiba and Jaish-e-Mohammed, and delivering funds for D Company's global operations, all these tasks were being handled by the Khanani brothers alone.
Javed Khanani, based in Pakistan, and Altaf Khanani, based in Dubai had no loud voices, no pretense. They sported simple glasses, a calm demeanor, and the precise language of an accountant, but they possessed such a cunning mind that they ran one of the world's most dangerous financial networks. According to a US Treasury report, these two brothers laundered USD 14 to USD 16 billion annually.
When Did American And Indian Agencies Got To Know About It?
By 2000, Altaf Khanani and Javed Khanani's network had spread worldwide. Money for drug cartels and terrorist organisations was routed through hawala. Javed operated from Pakistan, and Altaf from Dubai. Family members were also involved, and money laundering began through seemingly legal companies. By then, Indian and American agencies had become aware of the situation. Both countries were working to crack down on the network.
Fake Currency Notes Flood India
Meanwhile, India was suddenly flooded with fake Indian currency. Counterfeit notes were reaching everyone from the working class to high-profile businessmen and farmers. Surprisingly, the counterfeit notes circulating in the Indian market weren't just locally printed, low-quality ones; they were so similar to the originals that they often fooled ATM sensors. In fact, they were printed on security-grade paper, featuring watermarks and even special fibers.
How Was Pakistan's Secret Exposed?
Agencies were working day and night to crack down on the counterfeit currency syndicate. Ultimately, the investigations of several agencies, including the Delhi Police, NIA, DRI, and BSF, all converged on a common pattern. The printing, paper, and serial patterns of the counterfeit notes matched those of a supply chain linked to Pakistan.
Security agencies then uncovered Pakistan's conspiracy by tracking smuggling channels and international connections. Investigative agencies arrested some of the operatives involved in supplying counterfeit currency to the Indian market, one of whom was Abdul Karim Tunda. This led to several shocking revelations about the fake currency network.
Investigative agencies discovered that the counterfeit notes were printed in secure, state-protected facilities within Pakistan. From there, these notes were transported to India via Dubai, Kathmandu, Dhaka, and Kuala Lumpur, the capital of Malaysia. From there, D-Company members, Lashkar-e-Taiba facilitators, and cross-border smugglers would then circulate these notes in the market.
How Many Fake Notes Were Sent To India?
According to agencies, fake currency worth Rs 1,500 to Rs 2,000 crore was being sent to India from Pakistan every year. These counterfeit notes were serving two purposes simultaneously: first, terrorist funding, and second, the rupee's value was weakening, which was impacting the economy.
Demonetisation In India Ruined Khanani Brothers
On November 8, 2016, a year after Altaf's arrest, Prime Minister Narendra Modi addressed the nation and announced, "500 and 1000 rupee notes are banned in India." During demonetisation, long queues formed outside banks across the country, but they were also visible across the border.
Javed Khanani's fake Indian currency business, based in Karachi, came to a halt. The entire network collapsed in one stroke. Thousands of crores of rupees worth of fake Indian currency were reduced to mere pieces of paper.
It is said that the fake Indian currency in his stockpile belonged not only to Javed Khanani, but also to Dawood's D Company and other underworld networks. Following demonetisation in India, Javed Khanani went bankrupt. D Company and the underworld network began pressuring him for their money.