Trade Based Money Laundering
BANKING FINANCE|April 2018

Money laundering is the process of clouding source of money by using financial systems or services. Profits of crime and corruption are transformed into legitimate assets. Typically money laundering involves three steps: Placement, Layering and Integration. First, the illegitimate funds are furtively introduced into the legitimate financial system. Then, the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally, it is integrated into the financial system through additional transactions until the, dirty money appears clean.

G. Janardhan
Trade Based Money Laundering

Money laundering was first seen in individuals hiding wealth to avoid taxation or confiscation or a combination of both. Money laundering is an offence in its own right, but it is also closely related to other forms of serious and organized crime as well as the financing of terrorism.

Reverse money laundering : It is a process that disguises a legitimate source of funds that are to be used for illegal purposes. It is usually executed for the purpose of financing terrorism, but also be used by criminal organizations that have invested in legal businesses and would like to withdraw legitimate funds from official circulation. Unaccounted cash received via disguising financial transactions is not included in the official reporting and could be used to evade taxes, hand in bribes and pay under the table salaries.

Some of the common methods of money laundering are :

Tax evasion : Tax evasion and false accounting practice are the most common types of money laundering.

Structuring : Often known as smurfing, which is a method of placement whereby cash is broken into small deposits of money, used to defeat suspicion of money laundering and to avoid anti-money laundering reporting. A sub-component of this is to use smaller amounts of cash to purchase bearer instruments and then ultimately deposit these, again in small accounts.

Cash smuggling : This involves physically smuggling cash to another jurisdiction and depositing it in a financial institution, such as an offshore bank, with greater bank secrecy, less regulation, reduced taxation and less rigorous money laundering enforcement.

This story is from the April 2018 edition of BANKING FINANCE.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

This story is from the April 2018 edition of BANKING FINANCE.

Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.

MORE STORIES FROM BANKING FINANCEView All
'Deep Fake' - an emerging risk for Banking & Financial Sector
BANKING FINANCE

'Deep Fake' - an emerging risk for Banking & Financial Sector

Deepfake KYC fraud is a growing concern in India, where fraudsters leverage AI-generated deepfake videos and images to bypass Know-Your-Customer (KYC) verification processes. This has significant implications for financial institutions, fintech companies, and other organizations that rely on KYC to verify the identity of their customers.

time-read
1 min  |
December 2024
RBI CIRCULAR
BANKING FINANCE

RBI CIRCULAR

Operational framework for reclassification of Foreign Portfolio Investment to Foreign Direct Investment (FDI) - November 11, 2024

time-read
4 mins  |
December 2024
India's Fiscal Discipline: A Path to Economic Stability and Growth
BANKING FINANCE

India's Fiscal Discipline: A Path to Economic Stability and Growth

In a significant economic development, the fiscal deficit for the financial year 2023-2024 (FY24) has been recorded at 5.6% of GDP, falling below the government's revised estimate. This unexpected positive outcome highlights effective fiscal management and a recovering economy, offering a ray of optimism amidst global economic uncertainties.

time-read
6 mins  |
December 2024
Augmenting Productivity by Embracing Employee Engagement
BANKING FINANCE

Augmenting Productivity by Embracing Employee Engagement

As the world's largest coffeehouse chain, Starbucks is a brand that understands the value its employees add to the business. At Starbucks, every employee knows they are valued members of the team. It took Starbucks some time to do this. They have prioritized implementing employee-friendly rules from the beginning.

time-read
10+ mins  |
December 2024
Ethics in Artificial Intelligence: Navigating the Future Responsibly
BANKING FINANCE

Ethics in Artificial Intelligence: Navigating the Future Responsibly

Ethics in AI encompasses a wide range of issues, including fairness, accountability, transparency, and the potential for bias. At the core of these discussions lies the question: How do we ensure that AI serves humanity rather than undermines it? As AI systems increasingly influence critical areas such as healthcare, finance, and law enforcement, the stakes are high.

time-read
8 mins  |
December 2024
Digital Banking: The Need of the Hour
BANKING FINANCE

Digital Banking: The Need of the Hour

Development of an economy, especially economic growth primarily depends on industrial development. The industries depend on financial institutions support for funds especially from banks. Banks encourage individuals save and mobilise funds from bank deposits.

time-read
10+ mins  |
December 2024
Cyber Crimes in Banking: India's Battle Against the Digital Menace
BANKING FINANCE

Cyber Crimes in Banking: India's Battle Against the Digital Menace

The increasing adoption of digital banking services has transformed the way Indian consumers engage with banks. According to research from the Reserve Bank of India (RBI), the country's digital payment ecosystem expanded by approximately 55% between 2021 and 2023.

time-read
5 mins  |
December 2024
Legal News
BANKING FINANCE

Legal News

The Supreme Court (SC) ruled that clauses allowing public sector undertakings (PSUs) to unilaterally appoint arbitrators to resolve disputes with private contractors are invalid.

time-read
5 mins  |
December 2024
The Rise Of Green Marketing: Driving Sustainable Change
BANKING FINANCE

The Rise Of Green Marketing: Driving Sustainable Change

Green marketing refers to the practice of promoting products or services that are environmentally friendly or sustainable. It involves incorporating eco-friendly elements into various aspects of marketing strategies, including product development, packaging, advertising, and distribution.

time-read
9 mins  |
November 2024
ICICI Bank partners with PhonePe to offer instant credit on UPI
BANKING FINANCE

ICICI Bank partners with PhonePe to offer instant credit on UPI

ICICI Bank announced that it has partnered with PhonePe to offer instant credit on UPI to its pre-approved customers on the app of the digital payments company.

time-read
1 min  |
November 2024