Money Laundering by Twinkle Chopra

8/17/2019 Money Laundering by Twinkle Chopra

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MONEY LAUNDERING

A SEMINAR REPORT

Presented to

THE ARMY INSTITUTE OF LAW, MOHALI

IN PARTIAL FULFILLMENT OF REQUIREMENT OF DEGREE OF LL.M

OF THE PAPER V

JULYDE! "#$%&'

S()*+tted )- T+n/0e !1o2r3

!03ss - LL.M

Ro00.no- %$4

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INDE5

INTRODU!TION6666666666666666666666666..

THE PRO!ESS OF MONEY LAUNDERING6666666666666..

IMPA!T OF MONEY LAUNDERING66666666666666666

PREVENTION OF MONEY LAUNDERING66666666666666.

JUDI!IAL PRONOUN!EMENT 6666666666666666666

!ON!LUSION666666666666666666666666666

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INTRODU!TION

“Capital as such is not evil; it is its wrong use that is evil. Capital in some form or other

will always be needed”.

- Mahatma Gandhi

I. Mone T1e Root !3(se

The term ‘money’ generally includes banknotes as well as coins, although it may be

limited to such of each as are legal tender at the time and place in question. The

primary function of money is to serve as a medium of exchange, and as such it is

accepted without question in final discharge of debts or payment of goods or services 1.

oney is the root cause of many evils like corruption, black marketing, smuggling, drug

trafficking, tax evasion, and the buck does not stop here it goes to the extent of sex

tourism and human trafficking !a human selling another human in the era of human

rights". The more developed the nation, the more the standard of living of the people.

#eople want more money to cater to their needs and at a point of time they don’t

hesitate to have money from any source !black or white who cares". This is the

available soft corner where the concept of money laundering enters and prospers.

oney is devil’s child and is responsible for many mischief and evils.

The most common types of criminals who need to launder money are drug traffickers,

embe$$lers, corrupt politicians and public officials, mobsters, terrorists and con artists.

%rug traffickers are in serious need of good laundering systems because they deal

almost exclusively in cash, which causes all sorts of logistics problems. &riminal

activities such as terrorism, illegal arms sales, financial crimes, smuggling, or illicit drug

trafficking generate huge sums of money and criminal organi$ations need to find a way

to use these funds without awakening suspicions about their illicit origin.

1 Moss vs. Hancock [1899] 2 QB 111 at 116

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II. H+stor+730 E8o0(t+on

‘oney 'aundering’ as an expression is one of fairly recent origin. The original sighting

was in the newspapers reporting the (atergate )candal in the *nited )tates in 1+-.

The expression first appeared in a /udicial or legal context in 1+0 in merica in the

case of *) vs. 23,44,54.-+-. oney 'aundering as a crime attracted the interest in

the 1+06s, essentially within a drug trafficking context3. The term 7money laundering8 is

said to originate from afia ownership of 'aundromats in the *nited )tates.

oney laundering as a crime only attracted interest in the 1+06s, essentially within a

drug trafficking context. 9t was from an increasing awareness of the huge profits

generated from this criminal activity and a concern at the massive drug abuse problemin western society which created the impetus for governments to act against the drug

dealers by creating legislation that would deprive them of their illicit gains. The term

:money laundering: is said to originate from afia ownership of 'aundromats in the

*nited )tates. ;angsters there were earning huge sums in cash from extortion,

prostitution, gambling and bootleg liquor. They needed to show a legitimate source for

these monies.

9n 9ndia money laundering is popularly known as


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involved in the committing such an offence or offences to evade the legal consequences

of his action, and the concealment or disguise of the true nature, source, location,

disposition, movement, rights with respect to, or ownership of property, knowing that

such property is derived from serious crime

Thus, oney laundering is a process where the proceeds of crime are transformed into

apparently legitimate money or other assets. 9t is the processing of criminal proceeds to

disguise its illegal origin. 9n simple words, it can be defined as the act of making money

that comes from one source to look like it comes from another source. The act of money

laundering is done with the intention to conceal money or other assets from the )tate so

as to prevent its loss through taxation, /udgement enforcement or blatant confiscation.

The criminals herein try to disguise the origin of money obtained through illegal activities

to look like it was obtained from legal sources because otherwise they will not be able to

use it as it would connect them to the criminal activity and the law enforcement officials

would sei$e it.

IV !3(ses o; Mone L3(nder+n9


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F ;eographical 'ocation that Aacilitates @usiness Travel to and from rich neighbors.

F 9ncrease in sophistication and employment of professional people for doing the task 16

THE PRO!ESS OF MONEY LAUNDERING

oney 'aundering is not a single act but is in fact a process that is accomplished in

three basic steps as enumerated below11E

1. #lacementE :#lacement: refers to the physical disposal of bulk cash proceeds derived

from illegal activity. This is the first step of the money?laundering process and the

ultimate aim of this phase is to remove the cash from the location of acquisition so as to

avoid detection from the authorities. This is achieved by investing criminal money intothe legal financial system by opening up a bank account in the name of unknown

individuals or organi$ations and depositing the money in that account .

. 'ayeringE :'ayering: refers to the separation of illicit proceeds from their source by

creating complex layers of financial transactions. 'ayering conceals the audittrail and

provides anonymity. This is achieved by moving money to offshore bank accounts in the

name of shell companies, purchasing high value commodities like diamonds and

transferring the same to different /urisdictions. =ow, Clectronic Aunds Transfer !CAT"

has become boon for such layering exercise. %ifferent techniques like correspondent

baking, loan at low or no interest rates, money exchange offices, back?to?back loans,

10 3+ 9n 1++5,


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fictitious sales and purchases, trust offices, and recently the )pecial #urpose Lehicles

!)L#s" are utili$ed for the purpose of laundering the money.

-. 9ntegrationE :9ntegration: refers to the rein/ection of the laundered proceeds back into

the economy in such a way that they re?enter the financial system as normal businessfunds. The launderers normally accomplish this by setting up unknown institutions in

nations where secrecy is guaranteed. =ew forms of business give a platform for

integration exercise. =ow a person can start a business with /ust a webpage and

convert his illegal money to legal by showing profits from the webpage. There are other

ways like capital market investments, real estate acquisition, the catering industry, the

gold market, and the diamond market.

Aollowing are the various measures adopted all over the world for money laundering,

even though it is not exhaustive but it encompasses some of the most widely used

methods.

F Str(7t(r+n9 de2os+ts ?This method is also known as smurfing. 9n this method large

amount of money is broken into smaller, less?suspicious amount.

F O8erse3s )3n/s (nder9ro(nd= 30tern3t+8e )3n/+n9 oney launderers often send

money through various :offshore accounts: in countries that have bank secrecy laws,

meaning that for all intents and purposes, these countries allow anonymous banking.

complex scheme can involve hundreds of bank transfers to and from offshore banks.

F S1e00 7o*23n+es These are fake companies that exist for no other reason than to

launder money. They take in dirty money as :payment: for supposed goods or services

but actually provide no goods or servicesM they simply create the appearance of

legitimate transactions through fake invoices and balance sheets.

F In8est+n9 +n 0e9+t+*3te )(s+ness 'aunderers sometimes place dirty money in

otherwise legitimate businesses to clean it. They may use large business like brokerage

firms or casinos that deal in so much money itJs easy for the dirty stuff to blend in, or

they may use small, cash?intensive businesses like bars, car washes, strip clubs or

check?cashing stores.

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9t gives an overview as to how this menace has developed into transnational business

involving various sophisticated techniques and procedures. The ill?effects of money

laundering are unimaginable and have been discussed in next section.

IMPA!T OF MONEY LAUNDERING

Cffects of money laundering are seen all over the world on almost all the sectors of life.

ore noticeable are economic effects which are on a broader scale. %eveloping

countries often bear the brunt of modern money laundering because the governments

are still in the process of establishing regulations for their newly privati$ed financial

sectors.

9f left unchecked, money laundering can erode a nation’s economy by changing the

demand for cash, making interest and exchange rates more volatile, and by causinghigh inflation in countries where criminal elements are doing business. The draining of

huge amounts of money a year from normal economic growth poses a real danger for

the financial health of every country which in turn adversely affects the global market1

ost fundamentally, money laundering is inextricably linked to the underlying criminal

activity that generated it. 'aundering enables criminal activity to continue.

The impact of money laundering can be summed up into the following pointsE

→ #otential damage to reputation of financial institutions and market

→ (eakens the 7democratic institutions8 of the society

12 &hapter?9L oney 'aundering in 9ndiaE n Gffshoot of %rug Trafficking available at

httpEBBshodhganga.inflibnet.ac.inE0606B/spuiBbitstreamB1656-B10144B16B16Hchapter3.pdf

!accessed on 13th ay 614" #g. 1?1-.

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→ %estabilises economy of the country causing financial crisis

→ ;ive impetus to criminal activities

→ #olicy distortion occurs because of measurement error and misallocation of resources

→ %iscourages foreign investors

→. &auses financial crisis

→ Cncourages tax evasion culture

→ >esults in exchange and interest rates volatility

Inst3n7es- !3se St(d+es

oney laundering is the process that takes place every day in every part of the world.


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The *.). &ustoms )ervice, in con/unction with the %rug Cnforcement dministration

!%C" and &olombian %epartamento dministrativo de )eguridad, arrested - people

in Ianuary 66 as a result of a two?and?one?half?year undercover investigation of

&olombian peso brokers and their money laundering organi$ations. These people are

believed to have laundered money for several &olombian narcotics cartels. 'aundered

monies were subsequently withdrawn from banks in &olombia in &olombian pesos.

9nvestigators sei$ed more than 20 million in cash, 366 kilos of cocaine, 166 kilos of

mari/uana, 5.4 kilos of heroin, nine firearms, and six vehicles.

'ire !emittance Company $)

@oth a wire remittance company and a depository institution filed )>s outlining the

movement of about 2 million in money orders through the *.). account of a foreign

business. The wire remittance company reported various persons purchasing money

orders at the maximum face value of 2466 to 21,666 and in sequential order. They

received amounts ranging from 24,666 to 211,666. The foreign business identified by

the wire remittance company also was identified as a secondary beneficiary. The money

orders cleared through a foreign bank’s cash letter account at the *.). depository

institution.

14 ibid

15 bid. 5 #rakash 'oungani and #aolo auro, &apital Alight from >ussia !666"

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PREVENTION OF MONEY LAUNDERING

I. GLO>AL INITITATIVE

)ince money laundering is an international phenomenon, transnational co?operationis of critical importance in the fight against this menace. number of initiatives have

been taken to deal with the problem at the international level. The ma/or

international agreements addressing money laundering include the *nited =ations

&onvention against 9llicit Trafficking in %rugs and #sychotropic )ubstances,

popularly known as the Lienna &onvention and the &ouncil of Curope &onvention

on 'aundering, )earch, )ei$ure and &onfiscation of the #roceeds of &rime.

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the principle that domestic bank secrecy provisions should not interfere with

international criminal investigations15.

T9=&9#'C) 9n %ecember 1+00, the

@asle &ommittee on @anking >egulations and )upervisory #ractices issued a

statement of principles which aims at encouraging the banking sector to adopt

common position in order to ensure that banks are not used to hide or launder

funds acquired through criminal activities. The )tatement of #rinciples does not

restrict itself to drug?related money laundering but extends to all aspects of

laundering through the banking system, i.e. the deposit, transfer andBor

concealment of money derived from illicit activities whether robbery, terrorism,

fraud or drugs. 9t seeks to deny the banking system to those involved in money

laundering by the application of the four basic principles namely, identifying the

customer, compliance with the laws, cooperation with 'aw Cnforcement

gencies and adherence to the )tatement

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ob/ective to set standards and promote effective implementation of legal,

regulatory and operational measures to combat money laundering and terrorist

financing and other related threats to the integrity of the international financial

system.1 The ATA has developed a series of >ecommendations that are

recognised as the international standards for combating money laundering and

the financing of terrorism. They form a basis for a co?ordinated response to

these threats to the integrity of the financial system and help ensure a level

playing field. 9n pril 1++6, it issued a report containing a set of Aorty

>ecommendations, which were intended to comprehensive plan of action

needed to fight against money laundering. 9n Gctober 661, it issued the Cight

)pecial >ecommendations to deal with the issue of terrorist financing. 9n

Gctober 663, it published a =inth )pecial >ecommendation, further

strengthening the agreed international standards for combating money

laundering and terrorist financing10

*=9TC% =T9G=) ;'G@' #>G;>C ;9=)T G=CN '*=%C>9=;

;#' was established in 1++ with a view to increase effectiveness of

international action again money laundering through comprehensive technical

cooperation services offered to ;overnments. The programme encompasses

following - areas of activities, providing various means to states and institutions

in their efforts to effectively combat money launderingE 1. Technical cooperation

is the main task of the #rogramme. 9t encompasses activities of creating

awareness, institution building and training. . The research and analysis aims

at offering )tates Key 9nformation to better understand the phenomenon of

money laundering and to enable the international community to devise more

efficient and effective countermeasure strategies. -. The commitment to support

17 Kathryn '. ;ardner, Aighting Terrorism the ATA (ay, 'ynne >ienner #ublishers, Lol. 1-,

=o. - !IulyD )ept. 66", pp. -4?-34

18 9bid

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the establishment of financial investigation services for raising the overall

effectiveness of law enforcement measures.

II. INDIAN INITITATIVES

9n 9ndia, before the enactment of #revention of oney 'aundering ct, 66

!#'" the ma/or statutes that incorporated measures to address the problem of

money laundering wereE

→The 9ncome Tax ct, 1+51

→ The &onservation of Aoreign Cxchange and #revention of )muggling ctivities ct, 1+3 !&GAC#G)"

→The )mugglers and Aoreign Cxchange anipulators ct, 1+5 !)AC"

→ The =arcotic %rugs and #sychotropic )ubstances ct, 1+04 !=%#)"

→

The @enami Transactions !#rohibition" ct, 1+00→ The #revention of 9llicit Traffic in =arcotic %rugs and #sychotropic )ubstances

ct, 1+00

→The Aoreign Cxchange anagement ct, 666, !AC"

PREVENTION OF MONEY LAUNDERING A!T, #$$#

9n view of an urgent need for the enactment of a comprehensive legislation for

preventing money laundering and connected activities, confiscation of proceeds of

crime, setting up of agencies and mechanisms for coordinating measures for

combating money laundering etc., the #revention of oney 'aundering @ill 1++0

was introduced in #arliament on 3th ugust, 1++0. The @ill received the assent of

the #resident and became #revention of oney 'aundering ct, 66 on 1th

Ianuary 66-. The ct has come into force with effect from 1st Iuly 664. 9t has

been amended in 664, 66+ and recently in 61. The ob/ective of the ct is to

prevent money?laundering and to provide for confiscation of property derived from,

or involved in, money?laundering and for matters connected therewith or incidental

thereto1+.

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The ct consists of 16 chapters containing 4 sections and 1 schedule divided in 4

parts. &hapter 9 contain section 1 and which deals with short title, extent and

commencement and definitions. &hapter 99 contain section - and 3 which provide

for offences and punishment for money laundering. &hapter 999 has sections 4?11

which provide for attachment of property, ad/udication and confiscation. &hapter 9L

has sections 1?14 which deals with obligations of banking companies, financial

institutions and intermediaries. &hapter L has sections 15?3 which relates to

summons, searches, sei$ures, retention, presumptions etc. &hapter L9 has sections

4?3 which deals with the establishment, composition, qualifications, powers and

procedures etc of the ppellate Tribunal. &hapter L99 has sections 3-?3 which deal

with )pecial &ourts and &hapter L999 has sections 30?43 which provide for various

authorities under the ct their appointment, powers, /urisdiction etc. &hapter 9O has

sections 44?51 which deals with reciprocal arrangement for assistance in certain

matters and procedure for attachment and confiscation of property. &hapter O has

sections 5?4 which deals miscellaneous provisions including punishments,

cogni$ance of offences, offences by companies etc.

)'9C=T ACT*>C) GA T


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with fine3. 9n case of an offence mentioned under #art 4, imprisonment would

extend up to 16 years5.

99. ttachment, d/udication and &onfiscationThe confiscation of the property under the ct is dealt with in accordance with the

chapter 999 of the said ct. n official not below the rank of %eputy %irector can order

attachment of proceeds of crime for a period of 106 days, after informing the

agistrate. Thereafter he will send a report containing material information relating

to such attachment to the d/udicating uthority. )ection 0 details the procedure

of ad/udication. fter the official forwards the report to the d/udication uthority,

this uthority should send a show cause notice to concerned person!s" within -6

days. fter considering the response and all related information, the uthority can

give finality to the order of attachment and make a confiscation order, which will

thereafter be confirmed or re/ected by the )pecial &ourt.

999. Gbligations of @anking &ompanies, Ainancial 9nstitutions and 9ntermediaries

The reporting entity is required to keep a record of all material information relating

to money laundering and forward the same to the %irector. )uch information should

be preserved for 4 years0. The functioning of the reporting entity will be supervised

by the %irector who can impose any monetary penalty or issue warning or order

audit of accounts, if the entity violates its obligations+.The &entral ;overnment,

23 )ection - of the #'

24 )ection 3 of the #'

25 These deal with the offences under the =arcotic %rugs and #sychotropic )ubstances ct,

1+04, )ections 14, 15, 1,10, 1+, 6, 1, , -, 3, 4, , +.

26 #roviso to )ection 3 of the #'

27 )ection 4 of the #'

28 )ection 1 of #'.

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after consulting the >eserve @ank of 9ndia is authorised to specify rules relating to

managing information by the reporting entity-6.

9L. Cnforcement #araphernalia d/udicating uthority ? The ct empowers the

&entral ;overnment to constitute an

• d/udicating uthority having a &hairman and members and define their scope

of functioning and other terms of service.The d/udicating uthority will operate

through a )ingle or %ivision bench. The uthority has been given autonomous

powers to regulate its ad/udicating procedure.-1

• dministrator ? The property laundered will be taken care of i.e. managed after

confiscation by an dministrator who will act in accordance with the instructions

of the &entral ;overnment.-

• ppellate Tribunal ? ll appeals from an order made by the d/udicating

uthority will lie to an ppellate Tribunal constituted by the &entral

;overnment.-- 9t will consist of members headed by a &hairman.-3 n official

can resign by sending his resignation to the &entral ;overnment thereby giving

a - months’ notice.


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9L. )pecial &ourts ? the &entral ;overnment, after consulting the


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ownership of property and records recovered from a personJs possession. 3 The

burden of proof will be on the accused to prove that he is not guilty of an offence

under this ct.3- The offences under the ct are to be cogni$able and non?bailable.33

ANTI MONEY LAUNDERING STANDARDS R>I issued aster &ircular on KnowNour &ustomer !KN&" normsB nti?oney 'aundering !'" standardsB &ombating

of Ainancing of Terrorism !&AT"B Gbligation of banks under #revention of oney

'aundering ct, 66 and @anks were advised to follow certain customer

identification procedure for opening of accounts and monitoring transactions of a

suspicious nature for the purpose of reporting it to appropriate authority. These KN&

guidelines have been revisited in the context of the >ecommendations made by the

Ainancial ction Task Aorce !ATA" on nti?oney 'aundering !'" standards and

on &ombating Ainancing of Terrorism !&AT". @anks have been advised to ensure

that a proper policy framework on KN& and ' measures with the approval of the

@oard is formulated and put it place. The Gb/ective of KN& =ormsB ' easuresB

&AT ;uidelines is to prevent banks from being used, intentionally or unintentionally,

by criminal elements for money laundering or terrorist financing activities. KN&

procedures also enable banks to knowB understand their customers and their

financial dealings better which in turn help them manage their risks prudently.

THE FINAN!IAL INTELLIGEN!E UNIT INDIA "FIUIND' (hile the #revention of

oney 'aundering ct !#'" 66, forms the core framework for combating

money laundering in the country, The Ainancial 9ntelligence *nit ? 9ndia !A9*9=%" is

the nodal agency in 9ndia for managing the ' ecosystem and has significantly

helped in coordinating and strengthening efforts of national and international

intelligence, investigation and enforcement agencies in pursuing the global efforts

against money laundering and related crimes. These are speciali$ed government

agencies created to act as an interface between financial sector and law

42 #resumption as to records or property in certain cases uBs #'

43 )ection 3 of #'

44 )ection 34 of #'.

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enforcement agencies for collecting, analysing and disseminating information,

particularly about suspicious financial transactions. 9n terms of the #' >ules,

banks are required to report information relating to cash and suspicious transactions

and all transactions involving receipts by non?profit organi$ations of value more than

rupees ten lakh or its equivalent in foreign currency to the %irector, A9*9=% in

respect of transactions. 9t receives prescribed information from various entities in

financial sector under the #revention of oney 'aundering ct 66 !#'" and in

appropriate cases disseminates information to relevant intelligenceB law enforcement

agencies which include &entral @oard of %irect Taxes, &entral @oard of Cxcise P

&ustoms Cnforcement %irectorate, =arcotics &ontrol @ureau, &entral @ureau of

9nvestigation, 9ntelligence agencies and regulators of financial sector. A9*?9=% does

not investigate cases.

JUDI!IAL PRONOUN!EMENT

THE FAKE STAMP PAPER OR TELGI SCAM 45 ¬ The syndicate led by bdul Karim

Telgi used the chemically washed stamps and thus reintroduced the used stamp papers

back into the system simply by washing them in the chemicals so as to remove the

45 bdul Karim Telgi and )ohail Khan vs. *nion of 9ndia, through &@9, 613!"I'I1-5

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original contents. This was made possible because of the loophole in the system where

there was no branding of new stamps and the used stamp papers were not cancelled.

lso, the receipt used by &entral )tamp Gffice does not have any security features so

his allowed the accused to replicate them and show them as a genuine copy in order to

convince the customers. dditionally, he cultured officials at the )ecurity #ress in

=ashik, where stamp papers were printed. (ith their participation he used government

machinery to print stamp paper and eventually bought some of the machinery and

started counterfeiting on his own. The trial court held that evidences show that bdul

Karim Telgi hired an office at &ity &entre, 9ndore and he also took apartment on rent and

was carrying on business of sale of fake ;overnment revenue papers causing loss to

the ;overnment and corresponding gain to himself. The &ourt thus, found the accused

guilty of the offences and sentenced him to various terms of imprisonment. The accused

filed an appeal to the


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with the establishment of ppellate Tribunal, )ection which deals with composition

etc. of the ppellate Tribunal, )ection 0 which deals with qualifications for appointment

of &hairperson and embers of the ppellate Tribunal, )ection - which deals with

resignation and removal, )ection 36 which deals with members etc. as ultra vires of

rticles 13, 1+!1"!g", 1, 46, --@ of the &onstitution of 9ndia. 9t was also pleaded that

these provisions are in breach of scheme of the &onstitutional provisions and power of

/udiciary. The &ourt said that it is necessary to draw a line which the executive may not

cross in their misguided desire to take over bit by bit and /udicial functions and powers

of the )tate exercised by the duly constituted &ourts. (hile creating new avenue of

/udicial forums, it is the duty of the ;overnment to see that they are not in breach of

basic constitutional scheme of separation of powers and independence of the /udicial

function. The &ourt agreed that the provisions of #revention of the oney 'aundering

ct are so provided that there may not be independent /udiciary to decide the cases

under the ct but the embers and the &hairperson to be selected by the )election

&ommittee headed by >evenue )ecretary. Thus, the &ourt found merit in the arguments

of the #etitioner and ordered to implement amended rules in the ct which can be seen

by way of amendment of 660 in the ct.

GbservationE The &ourt maintained the basic structure of the &onstitution which

includes separation of powers and independence of /udiciary and did not allow the

Cxecutive to act beyond their powers curbing the /udicial powers.

UNION OF IN!IA vs HASSAN ALI KHAN # ANR 4$ . The allegation against the

accused is that they have committed an offence punishable under )ection 3 of the

#revention of oney 'aundering ct, 66. The said case has been registered on the

basis of a complaint filed by the %eputy %irector, %irectorate of Cnforcement on the

basis of the >eport based on certain information and documents received from the

9ncome Tax %epartment. n investigation was also conducted under the Aoreign

Cxchange anagement ct, 1+++, !‘AC’". )how?cause notices were issued to the

accused for alleged violation of )ections - and 3 of AC for dealing in and acquiring

and holding foreign exchange to the extent of >s.-5,666 crores approximately in 9ndian

47 Q611R 11 )&> 0.

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currency, in his account with the *nion @ank of )wit$erland. 9nquiries also revealed that

)hri


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6!1" of the &onstitution bars the ex?post facto penal laws and no person can be

prosecuted for an alleged offence which occurred earlier, by applying the provisions of

law which have come into force after the alleged offence. Thus, the court disposed off

the case stating that if the offence of money laundering is established against the

petitioner in this case, then the Cnforcement %irectorate shall be at liberty to initiate

fresh proceedings against the petitioner in accordance with law, thereafter.

GbservationE 9f an offence is committed under any ct and needs an action, the accused

shall, in no case, be held liable under the ct by a retrospective effect as it will be

violative of fundamental rights enshrined in part 999 of the &onstitution of 9ndia. Aresh

proceedings may be initiated.

GLO&AL MONE' LAUN!ERING RING OF I(&AL MIRCH 93+

full?blown investigation into suspected terror funding and hawala !illegal money

transaction" operations of the infamous ’%’ company has been launched with the

Cnforcement %irectorate !C%" bringing under its scanner a >s. -,666 crore global

money laundering ring allegedly involving family members and associates of late 9qbal

irchiS who was a right?hand man of fugitive #akistan?based don %awood 9brahim.

irchi, who died in 61- in the *K, is suspected to have laundered and moved funds

through the hawala route to purchase a host of properties in at least 16 or more

countries with the help of his associates. The agency which has registered a case under

the Aoreign Cxchange anagement ct !AC" recently to probe the entire range of

complex real estate transactions found that at least four buildings located in umbai

were sold off by irchi’s family in 616 by creating 7fictitious identities8 and front

companies in 7contravention of >@9 guidelines and AC rules.8 The agency has also

issued notices to irchi’s widow, two sons, relatives, lawyers and business associates

in connection with its investigation conducted under the Aoreign Cxchange anagement ct !Aema". The agency has also contacted the >eserve @ank of 9ndia !>@9" to obtain

records on irchi and his associates’ business and banking operations in 9ndia. The C%

49 9qbal ohammed emon vs. )tate Gf aharashtra !1++5 &ri'I 310"M 1+++ %elhi 1"

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has handed over the investigation of the case to a special investigation team as it has

identified numerous assets used to run the hawala racket.

!ON!LUSION

s it can be seen that money laundering involves activities that are international in

nature and are also at a greater level, therefore, to make a heavy impact it is necessary

that all countries should enact strict and as far as possible same laws so that the money

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launderers will have no place to target in order to launder their proceeds of crime by

way of weakness of /urisdiction or the like. )ince the )tates have no obligation in

deciding which offences should be considered as predicate offences to money

laundering there is no consensus into the international harmoni$ing efforts for anti?

money laundering. Thus, there is a need to enlist common predicate offences to solve

the problem internationally particularly keeping in mind the trans?national character of

the offence of money laundering. Aurthermore, the provision of financial confidentiality

in other countries is an issue. The states are unwilling in compromising with this

confidentiality. There is a need to draw a line between such financial confidentiality rules

and these financial institutions becoming money laundering havens. part from that,

many a people are of the opinion that money laundering seem to be a victimless crime.

They are unaware of the harmful effects of such a crime. )o there is a need to educate

such people and create awareness among them and therefore infuse a sense of

watchfulness towards the instances of money laundering. This would also help in better

law enforcement as it would be sub/ect to public examination. oreover, to have

effective anti?money laundering measures there need to be a proper coordination

between the &entre and the )tate. Aor that the tussle between the two should be

removed. The laws should not only be the responsibility of the &entre but it should be

implemented at the )tate level also. The more decentralised the law would be the better

reach it will have. Therefore, to have an effective anti?money laundering regime, one

has to think regionally, nationally and globally

Date post:	06-Jul-2018
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Money Laundering by Twinkle Chopra

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