MONEY LAUNDERING

Money Laundering

Money laundering is the process of moving illegally acquired cash through financial system so that it appears to be legally acquired.

                 Dirty money is proceeds derived from criminal conduct and crminal want the money to look like it came from a legitimate source. Some of the offenses of this type are:-

• Illegal arms sales, smuggling, drug trafficking and prostitution rings.
• Insider trading, bribery and computer fraud schemes.

Money laundering has three parts:-

• Placement:- where large amount of money broken  into small amounts.
• Layering:- Movements of funds to distance from their original sources.
• Integration:- Such funds re-enter into legitimate economy.

              Then such funds are invested into real estate, luxury assets or business ventures. 

Anti Money Laundering Act

• In India , anti money laundering is controlled by the Prevention of Money Laundering Act(PMLA), 2002 which came in effect from 1st july, 2005.
• RBI, SEBI AND IRDA have been brought under the act, so all FI's are included in this act.
• The agency monitoring the AML activities in India is called Financial Intelligence Unit(FIU).