Anti-Money Laundering

The literal meaning of laundering is washing or cleaning dirty clothes. The term Money Laundering is used for cleaning dirty money. It is the disguising or concealing of illicit income in order to make it appear legitimate. Money Laundering is being employed by launderers worldwide to conceal criminal activity associated with it such as drugs / arms trafficking, terrorism and extortion.
Money laundering is an act of underground economy which engages in the concealing of the source or destination of the specific financial transaction. In 1995, The Interpol General Secretariat Assembly defined money laundering as: “Any act or attempted act to conceal or disguise the identity of illegally obtained proceeds, so that they appear to have originated from legitimate sources”. This unfettered investment and spending of the criminally converted income of the offenders has been an ongoing concern of law enforcement agencies. 
Article 1 of EC Directive on Prevention of the use of the Financial System for the Purpose of Money Laundering, 1991 defines the term 'money laundering' as "the conversion of property, knowing that such property is derived from serious crime, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in committing such an offence or offences to evade the legal consequences of his action, and the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property, knowing that such property is derived from serious crime".
India became the 34th country member of the Financial Action Task Force in 2010 . India is also a signatory to various United Nations Conventions which deal with anti money laundering and countering financing of terrorism.
In India, money laundering is interlinked with drug trafficking. Money launderers ensure that money does not reach the hands of the formally regulated institution thus making sure that law enforcement in this respect does not take place. There is no legal paper work for this underground system of money as well as no room for penetration as these systems are generally family operated or gang operated. 
Money laundering is a serious threat to the global financial system and good governance. It is also boosting international crimes and terrorist activities. Governments in various countries today have come up with different legislations to deal with this menace. However more needs to be done in this regard. Black money in India, it is estimated accounts for around 40% of India’s GDP. Moreover it is the politicians in India, who are high risk customers who indulge in this activity. 

 

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