Identifying Hundi and finding safer ways to transfer money to Nepal

What is a hundi money transfer provider?

Hundis started out as financial tools that evolved on the Indian subcontinent, says the Royal Bank of India. These tools were used for trade and credit transactions to do the following:

• transfer funds from one place to another (remittances)

• borrow money (credit)

• as bills of exchange (trade)

In modern times, this system has evolved into a complex network of unregistered money transfer agents who move money back to countries like Nepal.

Investopedia describes it as an informal method of transferring money, without the movement of any physical money. In other words, it’s  “money transfer without money movement,” and is used primarily in Arab countries and in South Asia.

As mentioned earlier , the COVID-19 pandemic has changed the way the Nepalese immigrant community sends money back home. There has been a sharp increase in the use of hundi agents and, therefore, more people are falling prey to scams. By going through these unregulated channels, you put your money at risk.

What are the risks and disadvantages of sending remittances through hundi?

The Kathmandu Post says some of the disadvantages of using hundi include:

• The risk of losing your money - Hundi money transfer providers are not regulated so they could disappear with your money

• No transfer tracking - You may not know exactly where your money is at any given time

• Threat to Nepalese economy - By avoiding government regulation, hundi providers don’t pay any fees, which are critical to keeping the Nepalese economy alive

• Harming the government and foreign exchange reserves - Hundis are not a centralised process so the government can’t provide necessary oversight

• Risk of sanctions and fines - This practice is illegal, so you may be liable to pay a fine if your hundi agent is found to be fraudulent

As you can see, dealing with hundi agents means taking a significant risk. You might use hundi money transfer providers to send money back home in order to provide for your family. You may think that these unregistered channels are faster and cheaper – however, in reality, other services like WorldRemit are just as fast and cheap. So why risk your hard-earned money with anything other than WorldRemit?

Here are some of the advantages of using WorldRemit instead:

• A choice of payout method - Choose how and when you want your receiver to get their cash

• Transfer tracking - See where your money is every step of the way and when it should arrive

• Regulated oversight - We don’t operate outside of the laws of the land

• Fast transfers - 95% of our transfers arrive within minutes. *95% of our October 2021 transfers were authorised within 60 minutes.

• Exchange rate notifications - Get updates on when the best time to send money is

• 3 free transfers - Your first three transfers will be absolutely free with code 3FREE

And there’s much, much more for you to discover!

How to identify a hundi money transfer

Now that we’ve identified some of the risks of sending with a hundi agent and potentially losing your hard-earned money, here’s how to spot a hundi money transfer provider:

• Their registrations - Hundi agents may be registered with the Australian Transaction Reports and Analysis Centre (AUSTRAC) in Australia, but not with Nepal Rastra Bank in Nepal. You can check their registrations here

• No payout partners - Hundi agents won’t have any bank or remittance company as their payout partner in Nepal

• High exchange rates - They will offer a higher exchange rate than what you’ll find with legal money transfer company

• No official home - Hundi providers tend to operate through social media channels such as Facebook, WhatsApp or Viber. They tend not to have an official website or an app. However, some might have one, so it’s best to check if it’s a legal provider before sending money through them

• Questionable deals - They tend to offer special rates for sending large sums of money

• Accounts in flux - Hundi agents will keep changing their bank account details whenever you deal with them

Send money from Australia to Nepal with WorldRemit

The biggest difference between hundi agents and dealing with WorldRemit is that we play by the rules. We make sending money fast, easy, and most of all, safe.

We keep all of our exchange rates and transfer fees transparent and upfront. You can even use our calculator to find out how much it would cost to send your next transfer.

No matter how you send your money to Nepal – whether it’s bank transfer, cash pickup, mobile money or airtime top up – you can get your first three transfers completely fee-free with code 3FREE.

Send money now

Hundi: FAQs

Is hundi legal in Australia?

No, hundi is not legal in Australia, although it’s still quite prevalent. Please have a look at the section above which details how you can spot a hundi scam and avoid giving your details to these fraudulent agents.

Is hawala legal in Australia?

Hawala is also illegal in Australia, and AUSTRAC and the remittance community have tried to do a lot of work to clamp down on these practices.

Is hundi money laundering?

Hundi offers means for illegal activities to take place, such as money laundering. Money launderers use it as a way to move money from one place to another, without being tracked.

When you send through WorldRemit instead, you are sending through an official and licensed channel. This means your risk is greatly reduced and you can rest easy, knowing that your money is in safe hands.