Money Laundering Presentation

1. PRASANNA HEGDE

2. MONEY LAUNDERING

4. WHATIS LAUNDERING?

5. •The word “laundry”
literally means
“cleaning”
•Metaphorically,
money laundering
refers to
“cleaning on money”

6.  Drug Trafficking
 Extortion
 Corruption
 Fraud
 Gunrunning
 Human trafficking
 Poaching
 Murder for hire
 Terrorism, etc…

7. “ After foreign exchange and the
oil industry , the laundering of
dirty money is the world’s third
largest business”

8. “Funds laundered in the world could
range between 2 and 5 % of the world’s
Gross Domestic Product(GDP).
These percentages would Approximate
between US $ 1.5 trillion - U.S. $ 2trillion”
127490000000000.00
Indian Rupees

9. “Money laundering is the method by which criminals disguise the illegal
origins of their wealth and protect their asset bases, so as to avoid
suspicion of law enforcement and to prevent leaving a trail of
incriminating evidence
United Nations Office on Drugs and Crime
Definition-

10. PROCESS OF MONEY LAUNDERING
Placement Layering Integration

11. PLACEMENT
Placement 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.

12. PLACEMENT
This is achieved by investing criminal money into
the legal financial system by opening up a bank
account in the name of unknown individuals or
organizations and depositing the money in that
account.
It may involve use of smurfing techniques
through which the launderers make numerous
deposits of amounts of money that are small
enough to avoid raising suspicion.

13. LAYERING
Layering is the movement of funds from
institution to hide their origin.
It consists of putting funds, which have entered
the financial system, through series of financial
operations to mislead potential investigators and to
give the funds the appearance of having legal
origins.
Again, obscuring the source is the key.
Launderers may purchase expensive items such
as jewelry, yachts, or cars in order to change the
money's form.

14. INTEGRATION
Integration refers to the reinsertion of the
laundered proceeds back into the economy in such
a way that they re-enter the financial system as
normal business funds.
The funds may be reintroduced in the economy
through, for instance, the purchase of luxury items
or through investment in assets such as shares in a
company or real estate.

16. HAWALA

18. EFFECTS OF MONEY LAUNDERING
ON ECONOMY

19. Economic Distortion and
Instability:
 Money launders "invest" their
funds in activities that are not
necessarily economically
beneficial to the country. They
redirect funds from sound
investments to low-quality
investments that hide their
proceeds, economic growth
can suffer.

20. Loss of Control of Economic Policy:
 Some phases of money laundering transactions are
"underground" or in the informal sector of the
economy, such transactions do not appear in
official monetary and financial statistics, thus giving
misleading information to policymakers and leads
to misallocation of resources.

21. Undermining the integrity of financial markets
 Large sums of laundered money may arrive at a
financial institution but then disappear
suddenly, without notice, This can result in liquidity
problems to financial institutions.
Indeed, criminal activity has been associated with a
number of bank failures around
the globe.

22. Risks to Privatization Efforts:
 Privatization can also serve as a vehicle to launder funds.
Criminal organizations have funds to purchase formerly
state-owned enterprises and use them for their own
interests.

23. Other Affects OfMoney laundering
 facilitates corruption
and crime
 Reputation at Stake
 Evation of Tax
 Concentration of power
to criminals
 Undermines Democracy

25. Hirarchy under Prevention of Money Laundering
Act,2002
High Court
Special Court
Adjudicating Authority
Appellate Tribunal

26. Section 12 – OBLIGATION OF BANKING COMPANIES,
FINANCIAL INSTITUTIONS AND INTERMEDIARIES.
Maintainace of records
- KYC and all other related data
 Confidentiality
 Exemption by the Central Governments

27. • PUNISHMENT FOR THE OFFENCE OF MONEY
LAUNDERING-SEC 3 & 4

28. PREVENTION OF MONEY
LAUNDERING – GLOBAL INITIATIVES
 Vienna Convention-1988
 Council of Europe Convention
 European Union Money
Laundering Directive
 Basle Committee’s Statement
of Principles
 Resolution of the International
Organization of Securities
Commissions

30. • PRASANNA HEGDE