Topic– Money-laundering and its prevention.
2) What do you understand by Money laundering. Discuss. Also, examine the need to revisit the Prevention of Money Laundering Act.(250 words)
Why this question
Money laundering is a key concern for the governments across the globe and India is not immune to it. It is therefore important to know the meaning of the concept and discuss the need to modify the law related to it.
Directive word
Discuss- This is an all-encompassing directive which mandates us to write in detail about the key demand of the question. We also have to discuss about the related and important aspects of the question in order to bring out a complete picture of the issue in hand.
Examine- Here we have to probe deeper into the topic, get into details, and find out the causes or implications if any.
Key demand of the question.
The question wants us to write in detail about money laundering- definition, purpose, means etc. It also wants us to discuss why there is a need to relook the PMLA.
Structure of the answer
Introduction– Write a few lines about the meaning of money laundering- e.g Money laundering is the process of creating the appearance that large amounts of money obtained from criminal activity, such as drug trafficking or terrorist activity, originated from a legitimate source. The money from the illicit activity is considered dirty, and the process “launders” the money to make it look clean.
Body-
- Discuss the steps in money laundering- Placement-criminally derived funds are introduced in the financial system; Layering-the property is ‘washed’ and its ownership and source is disguised; Integration-‘laundered’ property is re-introduced into the legitimate economy;This three staged definition of money laundering is highly simplistic. The reality is that the so called stages often overlap and in some cases, for example in cases of financial crimes, there is no requirement for the proceeds of crime to be ‘placed’.
- Discuss why there is a need to relook the PMLA. e.g The term “reason to believe” is a vague term, which is not defined in the PMLA, thus giving wide powers to the enforcement directorate to attach the properties; The concerned authorities appear more interested in putting the accused behind bars and attaching their properties, thus bringing a big stretch of offences covered under Indian Penal Code, Income-tax Act, Wildlife Act, Copyright Act, etc, as shoots of the parent money laundering offences. Banks also become the “victims of crimes” as they are not able to alienate or dispose of secured assets into their hands to recover the money and bring liquidity and finances into the market, thus increasing NPAs and bad debt etc.
Conclusion– sum up your discussion in a few lines and form a fair and a balanced conclusion on the above issue.
