Laws related to Anti-money Laundering
By Team Legistify / 2016-04-01
Money laundering is the process by which large amounts of illegally obtained is given the appearance of having originated from a legitimate source. So, all the ways to convert the black money into white money are Money laundering. But in Money laundering, the black money must involve a predicate crime such as the violation of Indian Penal Code, IPC, Narcotics, Prevention of Corruption Act and Human Trafficking.

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Money laundering is the process by which large amounts of illegally obtained is given the appearance of having originated from a legitimate source. So basically, all the ways to convert the black money into white money are Money laundering. But in Money laundering, the black money must involve a predicate crime such as the violation of Indian Penal Code, IPC, Narcotics, Prevention of Corruption Act and Human Trafficking.

This is because in India, stashing black money is simply a civil crime involving tax evasion, money laundering has criminal dimensions related to black money. That is why we use the term Dirty Money in this context.

A case of Money laundering ostensibly appears to be an above-board financial transaction, however, the criminality underneath is hidden by a three-stage process :

  1. The first stage is when the crime money is injected into the formal financial System. This is called'placement';
  2. In the second stage, money injected into the system is layered and spread over various transactions with a view obfuscate the tainted origin of the money. This process is called 'layering';
  3. In the third and the final stage, money enters the financial system in such a way that original association with the crime is sought to be obliterated so that the money can then be used by the offender or person receiving as clean money. This is called 'Integration'.

Common forms of money laundering

Money laundering is the process by which large amounts of illegally obtained is given the appearance of having originated from a legitimate source. So, all the ways to convert the black money into white money are Money laundering. But in Money laundering, the black money must involve a predicate crime such as the violation of Indian Penal Code, IPC, Narcotics, Prevention of Corruption Act and Human Trafficking.

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Get connected to the Best Lawyers and Chartered Accountants Near You!


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