What is Money Laundering? How money laundering is being done? 02/10/2019 – Posted in: RSTV

Money Laundering

In News:

  • Money Laundering is again in hot news due to the arrest of P. Chidambaram in case of INX Media Corruption.

 

Money Laundering

In recent years, we are listening to Money Laundering continuously somewhere, also nowadays this is somewhat very popular in media too. But still, many of us are not aware of the “Money Laundering.” Let’s have a look here on what money laundering is.

 

What is Money Laundering?

Money Laundering actually is turning black money into white officially on papers and also the way of hiding the money earned by doing illegal works. In past years, we have witnessed very popular personalities get trapped in the case of money laundering. It is totally the illegal procedure in which fraud companies, fraud papers, and even the fraud exchange of money is being done, and in the way crores of illegal rupees is brought in front of the government in the form of white money. Tax evasion is also being done and then it results in the jail imprisonment to peoples doing such scams.

 

Current example is of our Home Minister P. Chidambaram who is facing very harsh situations of his political career. Money Laundering is again in hot news due to arrest of P. Chidambaram in case of INX Media Corruption. INX Media has taken a huge amount of loans illegally in the work tenure of our former Finance Minister.

 

How money laundering is being done?

Money laundering is the illegal process of concealing the origins of money obtained illegally by passing it through a complex sequence and bank transfers. It is the way of hiding the illegal earned money from the government.

Money Laundering came into existence from the criminal group of America, the group had earned the money by illegal bidding, and other illegal works then showed it as the hard the money. Then, in 1980 this became a serious issue in America.

Through money laundering, illegal money is invested in such legal works that even investing teams can’t even recognise the actual source of earning. One who has done the money laundering of illegal money is being called as ‘launderer.’

 

Process of Money Laundering:

It basically involves 3 steps:

  1. Placement: It means the money came into the market. The launderer invests the money in finance departments like banks and other formal departments.
  2. Layering: After placement of money, layering takes place. It involves all the activities related to hiding the illegal money. Launderer somehow manages to jumble up the money by showing illegal exchange of money to hide his real income. Launderer deposits his money in stocks, foreign investment, traveller checks, etc. These types of accounts get opened in the countries that help in money laundering.
  3. Integration: Integration of money takes place after layering. In this process, the money invested outside the country comes back to the launderer in the form of legally hard-earned money. This kind of money comes back in the form of investment in some company, buying property, or any other means.

 

Activities of Money Laundering

  • Making fraud companies that are also called as shell companies. This kind of company actually is a kind of company but do not have any money invested in real.
  • Also, no work is being done in these companies. These companies only exist on papers and documents only. Launderer shows a large amount of money transfers in the balance sheet of these companies, also takes the loan on the company name, goes to the government for tax relaxation, does not even fills the income tax returns, etc.
  • If somehow some investment team tries to invest the company, then the fraud papers are being presented to the committee to misguide them.

 

Money Laundering is a very serious crime in India and if someone found guilty in a money laundering case, then the person is subjected to punishment and fine both. Many cases came into existence recently; also the government is now taking strict actions in these types of cases.

 

Money Laundering Act

PNB scam, Commonwealth Games scam, 2G scam, is all the big scams. Recently P. Chidambaram is accused of money laundering blame. Money Laundering is a criminal offence to Indian Law. The Prevention of Money Laundering Act has been imposed to control such cases.

 

Under this act, the person found guilty is being punished for 3 to 7 years, also can be imposed fine with his property getting seized. If any company gets involved in such crimes, then the government may take serious actions against the employees of the company.

 

Enforcement Directorate committee takes care of all these types of crimes. Also, various courts have been subjected to trials of these kinds of criminals by High Court. These include Insurance companies, Higher purchase companies, non-banking financial companies, securities market, depository agent, stockbroker, sub-broker, mutual fund company, venture capital fund, merchant banker, investment advisor,  banker, and shell companies.

 

Money Laundering Act was enacted in 2002 in India and then got corrected in 2005, 2009, and 2012. The last correction was done on 3 Jan’2012 and being permitted by the President. Then, further, get implemented on 15 Feb.

Prevention of Money Laundering Act includes

  • Crimes list
  • Money hiding
  • Money get used in crimes

This act got applied on all mutual funds, insurance companies, etc.

 

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