Topic: Money-laundering and its prevention.
5) What is money laundering? Examine the recent policy efforts by the Government of India to tackle the problem.(250 words)
Why this question:
The CBI’s case is that the INX Media allegedly flouted the conditional FIPB approval, and brought in over ₹305 crore of FDI against the approved inflow
CBI alleges that INX Media engaged Karti Chidambaram, the promoter director of Chess Management, to resolve the issue.
Key demand of the question:
The question aims to evaluate in detail about money laundering- definition, purpose, means etc. It also wants us to discuss the available policies such as PMLA to tackle the same.
Examine – When asked to ‘Examine’, we must investigate the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications.
Structure of the answer:
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.
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’.
Briefly explain how globalization impacts money laundering.
Examine the recent policy efforts taken by the government – India is a full-fledged member of the Financial Action Task Force (FATF), PMLA 2002, Financial intelligence unit -IND etc.
Conclude with way forward.