Money Laundering in detail, UPSC new syllabus topic

Union Public service commission (UPSC) has added new syllabus related to the security issue, the new topics are Money laundering, naxalism and many more. In this post we will going to explain about Money laundering, what is money laundering , Methods of money laundering, how is money laundered and how it is relate to the corruption, terror finance. So read it carefully I will try to give all answers related to the money laundering.

 

What is money laundering and how is money laundered?

Money laundering means changes the illegal money, which is obtained from the illegal activities such as smuggling, extortion, and drug trafficking and gambling to the legal money to make the money legitimate. Every money launders main aim is washing the dirty money and convert it into the legitimate money. As we have seen that charted accountants and bank manager are playing a crucial role in the conversion of illegal money into the legal money and they also give suggestions to the money launders.

History of Money laundering

Money laundering had started from the 4000 B.C when Chinese merchant used to hide the money and send them to the outside of the country from the jurisdiction of the King; this was the beginning of Money laundering.

Money can laundered though these methods

  1. Placement
  2. Layering
  3. Integration

Also Check:  UPSC Answer key & Question paper of Prelims 2013

  1. Upsc new topic related to security

    What is money laundering

     

1. Placement means placed the money into various institutions such as bank because  larger amount/money can not be deposited in Bank, every bank will ask for the source of the money. (Private and Public banks). A person can easily deposit large amount of money through the various parts of money according to the banks rule and requirements, this is also known as smurfing. Because 

Money laundering can be done through invest in gold biscuits, coins, antiques, fine arts (paintings) which also give as legitimate source of money laundering.

2. Layering means invest money or send money far away from the origin of the money such as to invest in Swiss bank and second method is give the tax to the other states, which can easily makes the money legitimate

3. Integration means invest the money in the economy again and reinvest the money again through various businesses in economy.

 

How is Money laundering related with corruption

Corruption and money laundering are interlinked. As we have seen that, some bureaucrats take bribe with the help of third person and they wants to hide source of their illegal money. Thus, Third person invest that money from the far away of its origin. Such as, invest in Swiss bank, in gold coins etc. For understanding, we can take the example of such as many elites people have their money in the Swiss bank.

Narcotics Terrorism and Terror finance

Narcotics terrorism and terror finance are interlinked. Narcotics terrorism means import and exports the drugs to the other state or country to make them dependent on the drugs. With the help of that money, they purchased arms and ammunition which leads to the terror finance.

 

Techniques of money laundering

Money laundering can be done through various techniques

  1. Airlines is first method to do money laundering, which is safe method for the money launders, some groups have their own aircraft (Private), there is no intervention of government.
  2. Money laundering can be done through the porous land borders
  3. Last one is through the way of water:  Personal fleet is very successful way to the money laundering 

 

Narcotics Terrorism and Terror finance

Narcotics terrorism and terror finance are interlinked. Narcotics terrorism means import and exports the drugs to the other state or country to make them dependent on the drugs. With the help of that money, they purchased arms and ammunition which leads to the terror finance.

Thoughts: I am Aditya an UPSC aspirant i would like to say that, This is good decision for the Union Public service commission that added the syllabus relating to the security issue, because to know about the security is mandatory for the all UPSC aspirants. People must know about the money laundering. Because awareness can make you aware about the money laundering, I will hope this information will increase your general knowledge. If you find this is important then you must recommend to our friend and family members.

4 Responses

  1. Gautams August 10, 2013 / 11:18 AM

    before this post i doesn’t know about the process. Very knowledge full Post.

    • Adi August 10, 2013 / 1:25 PM

      Thank you Gautam for your views.. keep in touch we all post new article very soon..

  2. Ishan October 7, 2013 / 7:11 AM

    thanks alot for the information it helped me lot to understand about what exactly is money laundering.

    • Adi October 7, 2013 / 6:00 PM

      Your welcome Ishan..:) and it is important for every one to know about the money laundering

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