Money laundering involves acquiring, transferring, or concealing illegally obtained money to make it appear legitimate. It is typically a three-step process of placement, layering, and integration. According to the IMF, money laundering amounts to 2-5% of the world's GDP annually. To curb money laundering, the Basel Principles recommend policies around know your customer procedures, compliance with laws, and cooperation with law enforcement. India passed the Prevention of Money Laundering Act in 2002 to criminalize money laundering and allow for property seizure. The Act designates the Enforcement Directorate as the authority to investigate money laundering cases.

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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