Bengaluru: The Directorate of Enforcement officials have arrested seven persons for their involvement in a systematic network of money laundering that was exposed in a recent Income Tax raid, which revealed assets of over Rs. 152 crore in the house of contractors and a suspended government engineer here.

One of the arrested is G. Prashanth, brother-in-law of S.C. Jayachandra, who was serving as the Chief Project Officer of the State Highway Development Project. Jayachandra was arrested on December 5, and on questioning him, the extent of the systematic network of money laundering was revealed, said the Enforcement Directorate in a release.

The ED officials have also seized Rs. 91.94 lakh in more than 4,500 notes of the new Rs. 2,000 currency. The arrested were part of a network to supply new currency notes for demonetised currency to various persons at a commission of between 20 and 35 per cent. The accused had supplied money to Jayachandra, said the ED. The seven persons had set up a network to take advantage of the exemptions given by the RBI to micro-finance institutions.

Collection agents of these institutions, working on behalf of the network, collected valid tender, and deposited old notes in the institution’s account. The network used several households, who withdrew to their maximum weekly limit of Rs. 24,000. Current account holders, who can withdraw Rs. 50,000 weekly, were also a part of the network, said the investigating agency.