Money Laundering is the illegal course of action in which the origin of money obtained is concealed illegally by passing it through a combination of sequences related to banking transfers or it may be commercial transactions. These transactions return the ‘clean money’ to the launderer in a concealed and indirect way. In short it can be said that Money Laundering is the process to convert illegally obtained money into a legitimate money.
Stages of Money Laundering
Money Laundering have various stages, but generally there are three stages viz: Placement Stage, Layering Stage and Integration Stage
First Stage of Money Laundering-Placement
In this stage of Placement there is an act of placing illegally obtained money into a legitimate source such as Bank or any Financial Institutions and away from its source. It results that the source is hidden from the view. Next the above money moves through these Banks and Financial Institutions.
Second Stage of Money Laundering- Layering
The Second Stage of Money Laundering i.e., Layering is the most complex stage and it involves the movement of the illegally obtained money deposited in the Banks and Financial Institutions. In this process the launderer assures that the illegal fund moves so fast across the globe that even the Banks and Financial Institutions cannot trace it.
Third Stage of Money Laundering- Integration
The Third Stage of Money Laundering i.e., Integration is the final stage in the process and in this stage the ‘Cleaned Money’ is back into the economy. There are several ways of putting the ‘Cleaned Money’ into the Economy, but the most common way is to invest in properties. Sometimes it is also seen that the involved criminal allows the ‘Cleaned Money’ to be taxed. In such circumstances, it becomes all the more difficult to catch the said launderer.
Consequences of Money Laundering
Money Laundering always have negative impact on society due to creation of economic contortions by the launderers. It impairs the growth and development of the Legitimate Sector that always works for the country. It also affects the Exchange and Interest Rates. When these Exchange and Interest Rates are adversely affected then it can lead to inflation that will definitely attack the purchasing power of the common people besides bringing un-employment in the said country. Government Revenue collection decreases and the running projects of the government may get halted or postponed as per the case.
Money Laundering- Illegal Course of action
Money Laundering is the illegal course of action as in this process large amount of money is generated from such activities that are illegal and may encompass criminal activities such as Drug Trafficking or Terrorist Funding etc, but such money appears to have come from any legitimate source. The launderer transforms the said illegal amount to the ‘clean money’ through a combination of sequences related to banking transfers or commercial transactions.
Reason of Money Laundering
The reasons of Money Laundering may be varied, but the most common reason that comes in the spotlight is to meet the need of the concerned criminal to acquire assets without divulging the criminal behavior that generated the said amount.
Money Laundering is a bane on society. Government Investigating Agencies and Financial institutions try very hard to curb it and with the Central Government initiative Money laundering is minimized to a greater extent.