Section 3 of the Prevention of Money Laundering (PML) Act 2002 has defined the ‘offence of money laundering’ as ‘whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of the offence of money laundering.’

Any attempt or conduct designed to hide and conceal the source, movement, control or ownership of money illegally derived is an act of money laundering. Certain methods used by money launderers include Shell Companies, Money Mules, early repayment of long-term loans, accounts of NGOs / NPOs, TBML (Trade-Based Money Laundering) and Ponzi schemes etc. Black money gained through illicit activities, namely drug selling, human trafficking, terrorism, etc. is transferred in a certain pattern to manipulate the authorities and to hide the origin of the money.

The motive of money laundering is to wash black money in a seamless manner, gradually mixing it with white money, making it legal, which is referred to as placement. Then this money is transferred through a number of accounts in order to mask the origin of the fund, which is called layering. Then this layered fund is returned directly or indirectly, which is called integration. The advent of cryptocurrency, such as bitcoins, has exacerbated this phenomenon of anti-money laundering.

There is also one other method coming up used by Money Launderers, which is Trade-Based Money Laundering. Trade-Based Money Laundering (TBML) is the process of transferring money through trade transactions. This is achieved through misrepresentation of the price, quantity or quality of import or export. Techniques of TBML regarding Products and services include over-invoicing, under-invoicing, multiple invoicing, over-shipment, under-shipment, and wrong information.

Money laundering through online modes is also taking place in large numbers. This mode offers a wide range, speed, ease and low cost for money launderers. Peer-to peer websites, online banking, and cryptocurrencies are having a major impact on the ways money laundering takes place. Some other money laundering mode with online transactions includes e-commerce, online games, crowdfunding, social media scams etc.

The annual report from fraud prevention body Cifas found that the number of 14 to 24 years olds allowing their bank accounts to be used to move the proceeds of crime hit 32,000 in 2017, a 27 percent increase from the year before. Due to these online methods used, they are creating complex and layered transactions that are increasingly real-time, which makes monitoring and detection difficult. United Nations believes that the estimated value of money laundering worldwide, according to recent statistics, is between 2 percent and 5 percent of the world’s GDP. That’s approximately $800 billion to $2 trillion laundered annually. These estimates also suggest that less than 1 percent of the proceeds of crime are retrieved by the authorities.

Anti-money laundering compliance

Anti-money laundering compliance is the process of background screening and ongoing monitoring of customers to identify and eliminate any efforts of money laundering. The customer is screened against global watchlists, sanctions, and PEPs lists.
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