Money laundering is the conversion of illegal money so as to make it appear to originate from a legitimate source. Money laundering has a negative impact on the economy and political steadiness of the nation.
Statutory and institutional framework for dealing with money laundering:
- Enforcement Directorate – It collects, develops and disseminates intelligence relating to violations of FEMA. It also undertakes survey, search, seizures, arrest, against offender of PMLA offence.
- Financial intelligence unit – It acts as a national agency responsible for receiving, processing, analyzing and disseminating in relating to money laundering.
- Prevention of money laundering Act,2002 – It was enacted to prevent money laundering and to provide for confiscation of property derived from, or involved in money laundering.
RBI and SEBI – The RBI exercise supervisory role over the financial institution. SEBI also has regulatory framework such as registration of FDI, P notes etc.
Statutory framework :
Such a framework includes the establishment of special courts in States / UTs by the central government to conduct the trial of the offences of money laundering. The statutory framework also provides bilateral arrangement between countries in case of money laundering. The PMLA, 2002 also provides a strong base for the prevention of money laundering.
For the further strengthening of money laundering India needs to amend the PMLA that explicitly criminalize terrorists financing and expand the base of such offence, further the tax reform will also help in preventing such crimes. Government of India also needs more reform to regulate NGO, hawala etc to prevent money laundering.