Money laundering is the process of making illegally gained money appear legitimate. It is typically done in three steps: placement, layering, and integration. Placement involves physically disposing of bulk cash proceeds from illegal activities. Layering separates the money from its source through complex financial transactions to conceal the audit trail. Integration reinjects the laundered money back into the economy so it appears as normal business funds. The document outlines India's legal framework for preventing money laundering through the Prevention of Money Laundering Act of 2002, which provides punishments such as imprisonment and fines for money laundering offenses.

1. MR.B.J.VED

2. • Money laundering means acquiring, owning, possessing or
transferring any proceeds (of money) of crime or knowingly
entering into any transaction related to proceeds of the
crime either directly or indirectly or concealing or aiding in
the concealment of the proceeds or gains of crime,within or
outside India.
• It is a process for conversion of money obtained illegally to
appear to have originated from legitimate sources such as
drug / arms trafficking, terrorism & extortion.
• Money Laundering is done through
1.Placement:- Refers to physical disposal of bulk cash
proceeds derived from illegal activity.
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3. 2. Layering:- The separation of illicit proceeds from their
source by creating complex layers of financial
transactions. Layering conceals the audit trail & provides
anonymity.
3. Integration:- Reinjection of the laundered proceeds back
into the economy in such a way that they re-enter the
financial system as normal business fund.
 According to IMF – aggregate size of money laundering in
the world is 2% to 5% of world’s GDP.
The Basel Principles suggest policies & procedures in
following areas to curb money laundering
1. Customer Identification (Know Your Customer)
2. Compliance with Laws
3. Co-operation with Law Enforcement Agencies
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4. Legal Set up in India
• Indian Parliament passed “ The Prevention of Money
Laundering Act 2002” (Dec.2002) for prevention of money
laundering. The Act also provides for confiscation of property
derived from or involved in money laundering.
• Offences & Punishment
Offences are cognizable (Police can register & investigate
case & arrest the accused without the court permission)
/non-bailable. Punishment would be rigorous imprisonment for
not less than 3 years but upto 7 years and fine upto Rs. 5/-
lac. Enforcement Directorate has been made the designated
authority to track cases of money laundering which will have
far more powers than what was available to ED under FERA.
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