Question

Identify a real case of money laundering and discuss the details?

Answer 1

Lets first understand what is money laundering in simple terms.

Eg : If a person is earning income from illegal activities( like terrorism, smuglling, women trafikking, bribing etc.) and want to convert it into income that has originated from a legitimate source like salary from a firm or profit from business , then in such cases series of actions taken to convert black money to white money is called money laundering.

Real Life biggest examples in India in the recent past:

Demonatisation : All the 1000 and 500 Rs notes were replaced by the newly issued currency in india.

It was one of the biggest currency changing initiative taken by indian government to clean out black money.

Money laundering during Demonatisation.

1) Indian government introduced a scheme called Income Declaration Scheme where any one with unaccounted money or black money can surrender the same to Govt. and after 60% of tax from such money, the rest 40% will be returned to the owner. No question will be asked to owner about its source.

This is one of the best example in the recent past.

2) Axis Bank Chandini Chowk, branch in Delhi Case

KYC= Know Your Customer

Banks are required to collect the details of customer regarding his identity as per the KYC norms. And they must provide the KYC details to the Income tax officials or such other government officials if asked for.

But in this particular branch 44 a/c's were found for which KYC details of the account holder were not collected or kept in the bank. Unidentified indiviuals with the help of the bank officials were transacting over 100crore Rs through those bank a/c's.

Bank offcials later arrested following an income tax raid

3) Shell Companies or Paper Companies.

Companies that only exist in paper, there will no physical presence of the company. Such companies are created to conceal the identity of the real owner.

During demonatisation shell companies were created so that black money can be used to purchase gold and other valuable metals and the same were liquidated after the transaction .