Print Friendly, PDF & Email

Cryptocurrencies have been associated with money laundering due to their perceived anonymity and lack of regulation. The inclusion of virtual digital assets in the Prevention of Money-laundering Act, 2002 is first step in tackling illicit activities via cryptocurrencies. However, there are major challenges in implementation of the same. Examine.

Topic: money laundering and its prevention.

6. Cryptocurrencies have been associated with money laundering due to their perceived anonymity and lack of regulation. The inclusion of virtual digital assets in the Prevention of Money-laundering Act, 2002 is first step in tackling illicit activities via cryptocurrencies. However, there are major challenges in implementation of the same. Examine. (250 words)

Difficulty level: Tough

Reference: The Hindu

Why the question:

In a gazette notification, the Finance Ministry said the anti-money laundering legislation has been applied to crypto trading, safekeeping and related financial services.

Key Demand of the question:

To write about cryptocurrencies and money laundering and ways to prevent it.

Directive word: 

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:

Introduction: 

Begin by giving context.

Body:

In the first part, write about use of cryptocurrencies for money laundering and challenges associated with it – cryptocurrencies to launder money by converting illicit funds into cryptocurrency and then transferring them through various accounts to obscure the original source of the funds.

Next, write about the inclusion of cryptocurrency in PMLA,2002 and its implication. Write about the challenges in the enforcement of the same and suggest steps to overcome them.

Conclusion:

Conclude by writing a way forward.