What is Money Laundering?

Money laundering is the process of transforming illegal money and converting it with an image of being legal. This can be done through a variety of methods, including moving the money into different accounts, falsifying documents, and using complex financial transactions. This is done by covering the original source of the money by the various method so that it appears to be from legal activity.

What are the Stages of Money Laundering?

There are three main stages in money laundering:

• Placement – In the Placement Stage, illegal financial transactions are introduced into the legitimate financial system.
• Layering – In the layering stage, money that has been illegally obtained is moved, dispersed, or disguised to make it look legitimate. A money launderer will move money both domestically and internationally through various bank accounts.
• Integration – In the integration stage, the dirty money is made available to criminals in a way that makes it look like it has been legitimately acquired. The money may be used for investment in businesses that are legal or illegal, for personal expenses, or to purchase luxury goods.

What is Anti Money Laundering?

Anti-Money Laundering refers to a set of regulations and procedures that financial institutions follow to achieve regulatory compliance and to prevent and detect money laundering. Anti-money laundering aims to make it more difficult for criminals to hide their illegal money.

What is PMLA - Being AML Law in India?

The PMLA is a law passed in 2002 that went into effect in 2005. An Act to prevent money laundering and will allow the government to confiscate property derived from, or involved in money laundering.

Penalties under PMLA

There are various actions that can be taken against someone who is found to be guilty of money laundering, such as:

• Property can be confiscated from a person or organization if there is suspicion that it was obtained illegally. This can include freezing or seizing the property, and/or attaching it to the person or organization's assets.
• A punishment of imprisonment for a minimum of three years and a maximum of seven years along with a fine.
• If the crime of money laundering is connected to the Narcotic Drugs and Psychotropic Substances Act, of 1985, the punishment can go up to 10 years.

Conclusion

Money laundering is a serious issue throughout the world. Each year billions of dollars are being laundered through various countries. Fortunately, governments are taking this issue seriously and have implemented very strict regulations to prevent or dissuade companies and people to indulge in money laundering. There are harsh penalties for violation of these regulations which will force companies to think twice when it comes to money laundering.