About
- Money laundering is concealing or disguising the identity of illegally obtained proceeds so they seem to have originated from legitimate sources.
- It is regularly an issue of other, lots more critical, crimes which include drug trafficking, theft or extortion.
- According to the IMF, worldwide Money Laundering is expected among 2 to 5% of World GDP.
Working
- It includes 3 steps: placement, layering and integration.
- Placement places the “dirty money” into the legitimate economic system.
- Layering conceals the supply of the cash through a series of transactions and bookkeeping tricks.
- In the case of integration, the now-laundered money is withdrawn from the valid account to be used for criminal activities.
- Money Laundering can take several bureaucracy, some of them are:
- Structuring also referred to as as Smurfing
- Bulk Cash Smuggling
- Cash in depth Businesses
- Trade based totally Laundering
- Shell organizations
- Round tripping
- Gambling
- Black salaries
- Tax amnesties
- Transaction laundering
Impacts
- Economic Impacts:
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- Undermines legitimacy of private sector
- Undermines integrity of financial markets
- Loss of control of monetary coverage
- Economic distortion and instability
- Loss of revenue
- Security threats to privatisation efforts
- Volatility in alternate charges and interest prices because of unanticipated transfers of fund
- Rise of economic expenses
- Affects exchange and international capital flows
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- Social Impacts:
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- Increased illegal activity
- Decreases human development
- Misallocation of resources
- Effects consider of local residents of their domestic financial institution
- Declines the ethical and social role of the society through exposing it to activities
- such as drug trafficking, smuggling, corruption and different criminal activities
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- Political Impacts:
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- Initiates political mistrust and instability
- Criminalisation of politics
Steps Taken through Government of India to Prevent Money Laundering
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- Criminal Law Amendment Ordinance (XXXVIII of 1944): It covers proceeds of only positive crimes such corruption, breach of belief and dishonesty and not all of the crimes under the Indian Penal Code.
- The Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976: It covers penalty of illegally acquired properties of smugglers and foreign alternate manipulators and for subjects linked therewith and incidental thereto.
- Narcotic Drugs and Psychotropic Substances Act, 1985: It offers for the penalty of assets derived from, or used in illegal traffic in narcotic drugs.
- Prevention of Money-Laundering Act, 2002 (PMLA): Its bureaucracy is the centre of the legal framework established by India to fight Money Laundering.
- PMLA (Amendment) Act, 2012: Adds the concept of ‘reporting entity’ which would include a banking industry, financial institution, centreman and so forth.
- Financial Intelligence Unit-IND: It is an independent body reporting without delay to the Economic Intelligence Council (EIC) headed via the Finance Minister.
Enforcement Directorate (ED): It is a regulation enforcement agency and economic intelligence organisation responsible for imposing monetary laws and combating monetary crime in India.
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