MONEY LAUNDERING

  • February 24, 2022
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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MONEY LAUNDERING

TOPIC: Economy

Context- ED arrests Maharashtra Minister Nawab Malik in money laundering case.

Concept-

Money Laundering:

  • Money laundering is concealing or disguising the identity of illegally obtained proceeds so that they appear to have originated from legitimate sources.
  • Money Laundering is an offshoot of parallel economy, which deprives most governments of legitimate revenue.
  • It involves three steps: placement, layering and integration.

Prevention of Money-Laundering Act, 2002 (PMLA):

  • The specific legislation dealing with money laundering is the Prevention of Money-Laundering Act, 2002 (for short ‘PMLA’).
  • The law was enacted to combat money laundering in India and has three main objectives:
    • To prevent and control money laundering;
    • To provide for confiscation and seizure of property obtained from laundered money; and
    • To deal with any other issue connected with money-laundering in India.
  • It came into force with effect from 1st July 2005.
  • It extends to the whole of India including the state of Jammu & Kashmir.
  • The provisions of this act are applicable to all financial institutions, banks (Including RBI), mutual funds, insurance companies, and their financial intermediaries.

Authorities for the implementation of the Act:

  • Financial Intelligence Unit-IND:
    • It is an independent body reporting directly to the Economic Intelligence Council (EIC) headed by the Finance Minister.
    • FIU-IND under the Department of Revenue, Ministry of Finance is the central national agency responsible for receiving, processing, analyzing and disseminating information relating to suspect financial transactions to enforcement agencies and foreign FIUs.
  • Enforcement Directorate (ED):
    • The Directorate of Enforcement, in the Department of Revenue, Ministry of Finance, is responsible for investigating the cases of offence of money laundering under Prevention of Money Laundering Act, 2002.
  • Some Predicate Offences can also be investigated by agencies such as Police, Customs, SEBI, NCB and CBI, etc. under their respective Acts.
economy Money Laundering