Internal Security = Money Laundery

Money Laundery

1)What are the various processes and methods involved in money laundering?

ans:
Processes of Money Laundrey:
>Placement stage:
     --splitting money into unrecognisable amount
     --Ex- splitting into such smalll amount which are permissible without verification of source.

>Layering stage:
      --when fund has entered into legal system @ Placement stage then,
      --layering to distance from source of origin.
      --Ex- fake invoicing, fake transaction ....using mismatch in various law acrrose globe.

>Integration stage
      --entry into real life from financial institution.
      --buying or investing in real estate, luxury durables, business tour etc........since money came after layering nobody knows that source was black

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Methods of money laundrey
 >Structuring:
   --used in Placement stage= spliting into unrecognisable units.
 
 >Bulk cash smuggling:
  --Hawala transaction

 >Trade based Laundrey:
  --used at Layering stage.
  --false invoicing etc.

>Shell companies and trust:
  --used at Layering stage.

 >Round tripping
  --Layering and integration stage.

>Bank controll:
  -- Bank with weak rules---these smugllers buy stake and controlls.

 >Black salary:
  --Cash salary to unrecognised worker in industy from black money.

2)What are the effects of money laundery?

Ans:
3 dimensions of impact:
--On business = moral ↓ + sudden high and fall in money.
--On economic development=monetory equipment fails.
--On society= Organised crime

3)Explain measures to prevent Money Laundering?

Ans:
--FIU IND ie. Financial Intelligence Unit India = monitoring agency.
--Prevention of Money Laundery Act 2011
-- 2^nd ARC recommendation
--Supre court = recommended to decrimanalise politics


4)Describe recomandation of 2^nd ARC on money Laundrey?                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        

5)Explain the recommendation of SIT of Black money.
Ans:
--SEBI = should have monitory mechanism of unussual rise and fall in Stock.
--Participatory note= KYC must be done  and SEBI must be informed
--If any organisation is holder of Participatory not=SEBI should take information of promoter and directors of organisation
--establishment of :
   >additional court to deal with pending case under IT Act.
   >Directorate of Revenue Intelligence (DRI) @ SEZ
--Need to varify money of donation =religion/ educational.
--Trade based money Laundery= curbed by placing a ceiling on bigger transaction.

6)Explain the role of FATF?
--for = Money Laundery + Terror Funding + other threat to international financial institution.
--provisions:
    >should create institutions like FIU(Financial intelligance Unit), like FIU IND in India.
    >FIU= should have power to investigate criminal acts like= Money laundery + teror funding etc.
    >UN convention....like freezing property + abstain support + dissallowing public support + criminalise that fund.
    >Transperancy measure
    >Internation cooperation.
--Negitive= do not checks the effectiveness of domestic laws.

7) Explain the need of Prevention of Money Laundery Act 2011.

Ans:
--Freezing property + acquisition + possession of property.
--when money laundery  case found in company= reporting authority + employees + directory = culprits.
--Funds related to money laundery = assumed to be involved in crime= unless proven clean.
--Appeal against the Tribunal directly to Apex court= within 60 days
--Allows transfer of cases to Special court for trial.