Discussion
Hawala in India is prohibited under the provision of which of the following Acts
Answer: C
Correct answer: Foreign Exchange Management Act
Hawala transfers money across borders outside the banking system and without any foreign exchange actually crossing it, which makes it a contravention of the Foreign Exchange Management Act, 1999 (and before that of FERA). Because it leaves no audit trail it is also a route for money laundering, so the Prevention of Money Laundering Act bears on it too.
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