MONEY LAUNDERING

MONEY LAUNDERING

• Money laundering is the process of transforming illegally gained money or proceeds

of crime into legitimate money and assets.
• Money laundering has been addressed in the UN Vienna 1988 Convention Article 3.1
describing money laundering as:
“the conversion or transfer of property, knowing that such property is derived from any
offenses, for the purpose of concealing or disguising the illicit origin of the property or
of assisting any person who is involved in such offenses to evade the legal
consequences of his actions”.
HOW MUCH MONEY IS LAUNDERED PER
YEAR?

• A 2009 report of the United Nations Office on Drugs and Crime (UNODC)
estimated that, criminal proceeds amounted to 3.6% of Global GDP with
2.7% being laundered.
PROCESS OF MONEY LAUNDERING

Transfer offshore bank

accounts- Tax haven
countries
HOW DOES ONE MOVE AROUND SUCH BIG
AMOUNT OF MONEY EASILY??
--Methods of money laundering

• SMURFING
• Electronic money transfers
• Hawala Transactions
• Offshore accounts, Tax havens & shell companies
• Cryptocurrencies
EXAMPLES OF MONEY LAUNDERING

• Casino laundering:- In this instance, a money launder can purchase chips at a casino with
the money they obtained illegally. At a later date, the launder can return the chips for cash or a
bank transfer from the casino into their account.
• Asset laundering:- In this circumstance, a money launder can use illegitimate money to
purchase assets, such as high-value items, such as artwork. Then at a later date, the launder
will resell the item for cash or a bank transfer through an auction. 
• Generally in the real world not just one method but combinations of different methods are used
to launder the money and to integrate it back into the hands of the actual owners of the money
IMPACTS OF MONEY LAUNDERING

• Threatens economic security

• Threat to the stability of banking & financial system
• Effects Government revenue
• Disrupt the foreign exchange reserves of the country
• Effect evaluation of currency
• Breeds corruption- effects growth and development- social and geopolitical consequences(drugs linked to
money laundering)
• Threatens national security( terror financing)
• Enables organized Crime and terror financing
 PREVENTION OF MONEY LAUNDERING

Global level we have FATF(Financial action task force) it was set up by G7

countries in 1980 its mandate is to act as a policy making body to set global
regulatory standard so that countries can implement such anti money laundering
measures and counterterrorist financing.
• G7 countries are obligated to follow such standards
• FATF has come up with 40 specific measures to increase vigilance in banking
system- following better diligence, better verification measures, through KYC
verification, maintaining financial records , checking suspicious transactions.
• India is a member of FATF
• India has implemented these standards through a dedicated national Law—
Prevention of money laundering act 2002
• This act has been amended repeatedly to improve standards against money
laundering and also to inculcate the FATF standards which are constantly
evolving.
• 2019 act was amended and money laundering has made a stand alone crime
 PREVENTION OF MONEY LAUNDERING 2002
• As per the act DERIVATION OF PROPERTY OUT OF SUCH MONEY TO CONFISCITATE IT
• Def of money laundering- Sec3= whosoever directly or indirectly attempts to indulge or knowingly
accessed or knowingly is a party or is actually involved in any activity related to or connected with
proceeds of crime including concealment……………
• Sec2(1)(u) Proceeds of crime( illegal wealth); any property derived or obtained as a result of
criminal activity relating to scheduled offense- These properties can be seized and govt can auction
them in order to compensate the losses that have happened in the banking an d financial sector.
• Financial INTELIGENCE UNIT INDIA to track suspicious transactions.
• A dedicated law enforcement agency is also set up called Enforcement dirocorate.
PUNISHMENT UNDER PML 2002

• 3yrs to 7yrs rigorous imprisonment fine without limit

• Schedule Part A para 2- Narcotics crime- Rigorous imprisonment 3yrs to
10yrs and fine without any limit
THANK YOU