Question 1 · 10 marks · 140 words written
Opening · a definition
The act of converting black money into white money using layering of transactions is Money Laundering. METHODS OF MONEY LAUNDERING
Body · points and prose
oney Laundering
- (1) loss of tax to government
- (2) used in illegal activities like arms and drug smuggling
- (3) threat to national security
- (4) terror funding
METHODS OF MONEY LAUNDERING
- (1) Shell companies in tax havens. (eg) parent companies with no independent functioning located in Hawaii
- (2) Hawala transaction transnational movement of money through channels.
③ False purchase of assets at over valuated prices
eg) buying property in foreign countries at 30 times more than real worth.
④ Fake donations in NGO & charities eg) 30% of Indian NGO ecosystem support money laundering.
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MEASURES BY GOVERNMENT
① Stringent PMLA - Prevention of Money Laundering Act - burden of proof on accused
② Exceptional powers of Enforcement Department - under Ministry of Finance - GPC norms donot apply
③ Boast to digital payment ecosystem - Digitalisation of economy, GST filing, CBDC are all attempts to curb money laundering.
Close · no separate close
None written.