Libertatem Magazine

Money Laundering in India

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The term “money laundering” is usually attributed to a set of procedures involved in legalizing accumulated assets through potentially illegal means. In other words, it involves the transformation of illegal profits into seemingly legitimate assets, and sometimes into businesses that have been developed as a means of generating more revenue to fund the assets that originally generated the profits. In most jurisdictions today, the term is considered to be combined with other types of financial and commercial crime and misconduct that affects the established order of the financial system in these jurisdictions, including but not limited to confusing sources of funds, or even from using funds of countries/regions are considered illegal sources to generate funds.

Keywords –

Money Laundering in India, Laws, Hawala Networks, Drugs, Currencies. 


Deregulation refers to money laundering because it appears to come from an authorized source. The term “money laundering” is said to come from the ownership of the laundry by the American mob. The mob has made a lot of money by cheating and gambling. 

In India, money laundering is widely known as hawala transactions. It became popular in the early 1990s when many politicians fell for its trap. Hawala is a different or similar payment system. “Hawala” is an Arabic word that means the transfer of money or information between two people through a third party. The hawala mechanism makes it easy to convert currency from black to white. Black money means income, unpaid income, and other taxes. Black money is obtained through illegal trade or services. The money earned through legal means when paying taxes is called white money. 

Generally, the payment process includes three stages: deposit, deposit, and consolidation. The first stage, taxation, occurs when the proceeds of criminal activities are transferred to official financial institutions. In the second stage, the allocation and transfer of funds from various financial institutions make it difficult for the authorities to trace these funds to the place where they deposited the first deposit. Finally, the merger phase legitimizes the “dirty” investment by transferring the “dirty” investment to a legal entity. 

Law enforcement agencies are trying to curb the increase in drug trafficking by controlling money laundering activities. The legal authorities hope that if the money from drug trafficking can be returned to the hands of drug manufacturers, then drug trafficking can be reduced. Therefore, countries that are heavily involved in drug trafficking activities are slowly beginning to enact laws against money laundering and drug abuse. India is no different from this approach. India is currently plagued by drug trafficking and related crimes. 

Money laundering in India 

India has taken various measures to combat drug trafficking and money laundering activities. In recent years, India has become the main source of income for law enforcement agencies. 

The heroin problem 

In the past two decades, India has become a major trafficker of drugs, especially heroin. India is located between the Golden Crescent in the west and the Golden Triangle in the east. These are the two regions with the highest opium poppy production and have become a major trading center for heroin. Hundreds of pounds of high-grade heroin are shipped daily from New Delhi and Mumbai to India, to Western Europe, and the United States. 

India’s involvement in the heroin trade with the Golden Crescent countries (including Iran, Turkey, Pakistan, and Afghanistan) dates back to the late 1970s and early 1980s. The choice to transport heroines through India rather than land transport to Western Europe led to strict border controls in the region. Due to the ongoing war in the region, border operations in these countries are closely monitored. 4,444 Golden Crescent countries have started developing alternatives to heroin in India. However, the decline in heroin entering India from the Southwest has not led to a decline in drug trafficking in India. Due to the decline in heroin exports from the Golden Crescent countries, the amount of heroin entering India from its eastern neighbors has increased significantly. East India is the Golden Triangle. The countries of the Golden Triangle constitute the largest opium-producing area in the world. 

In the past, heroin produced in this region of Southeast Asia was exported westward from Thailand. Until recently, heroin continued to circulate freely across the Thai border, mainly from Myanmar. However, strict surveillance of the Thai border has led to a decrease in the amount of heroin entering the country. As an alternative to Thailand, Southeast Asian drug lords chose India as their main destination for drug-related activities. With the help of the Yangon military government and the National Law and Order Restoration Committee (“SLORC”), opium was freely transported to the Indian border in Myanmar. Once in India, heroin is exported all over the world. 

There is a large quantity of heroin in the country. India’s growing role in world trade has spawned a generation of people who grew up in an environment where heroin is readily available. In a country with a long history of extreme poverty, heroin is so cheap that even the highest income groups can afford it. Drug abuse is now a major problem in the Indian subcontinent. 

PRE 2002 – Ways to combat money laundering 

Some Indian banks doubt that they want to back out of their strict banking policies, and this continues to allow people to make money in India. Hawala’s former underground banking system has exacerbated money laundering problems in India. To eliminate money laundering, the Indian government drafted the Anti-Money Laundering Bill (“MLPB”). It has also signed agreements with other countries to assist in the investigation of money laundering activities. 

Anti-Money Laundering Law, 2002. 

In 2002, the bill was passed and an anti-money laundering law was introduced. The bill entered into force on July 1, 2005. In the broadest sense, the law prohibits receiving funds obtained in most cases. According to the British Criminal Justice Act, the law imposes a criminal obligation on those who know or suspect that someone is involved in withholding proceeds of crime but do not report it. Anyone who attempts to indulge himself directly or indirectly or who intends to participate, whether he is an organization or participates in any process or activity related to the proceeds of crime and exposes it as uncollected assets, will constitute a crime of money laundering. Article 4 of the law provides penalties for money laundering as defined in Article 3. Imprisonment is 3 to 10 years. The case can be fined up to Rs. 500,000. 

Chapter III of the law stipulates the rules relating to seizure, adjudication, and seizure. Section 9 regulations.

Chapter IV, searches, chapter of fainting contracts Edit, Very wide power supply. Article 16 of the Law grants the authority to grant authority in place when there is a reason to believe that the illegal price of money has been committed. Motorized power is similar to the 1336th of the Income Tax Law. Article 17 of the law is responsible for the Board of Directors who had to be recorded if it had to register, and all committed the act of money laundering or have been certified to a police officer to find properties that have been certified. On the other hand, certificate, compile the checklist and review the person in charge of the oath. Under shares, four authorities, that is, 

There are four authorities under the act, namely:

(a) Judicial authority,

(b) Appeal Tribunal,

(c) The Special Court,

(d) Director, Financial Intelligence Unit.

The shares include a total of 75 sections, which are seriously responsible for financial institutions. It has been suggested that the Bank must inform the transactions necessary to report all the greater transactions than a loop. Indian governments, despite non-approved Indian spare parts banks, this law was included in this action. Alternatively, banks are responsible for reporting that they are suspected or suspected of being suspicious. 

Establishment of both agreements 

To achieve the purpose of the recommendations of Vienna and FATF, India was recently concluded two bilateral agreements intended for drug transport management and money laundering.  In April 1995, India signed an agreement with Egypt and participated in efforts to combat Dogra’s drug transport in both countries. This agreement allows the identification, frozen, and revocation of assets used to the exchange of intelligence of the type of operation and withdrawal dragged. The Indian government signed a comprehensive agreement similar to the Government of Pakistan with the Government of Pakistan in 1997. Each country is committed to establishing several cooperative mechanisms to regulate the transport of medicines and money laundering, including the exchange of fast and efficient information. The Government also agreed to establish a mechanism to exchange joint financial investigations and information. Two countries have recently discussed how to enter a new contract, including other countries in this area. 

Legal Assistance Agreements 

India has already been developing international cooperation agreements. In 1997, the Indian Government signed a legal agreement with the Exclusion Agreement and Russia. Legal assistance agreements promote investigations of illegal activities in these countries by granting the production of much information that is well comprehensive in money in the illegal prosecution. This agreement is not important for future surveys, taking into account that the number of medications that have been smuggled from India and Eastern Europe is increasing. The Indian government held a regional meeting on monetary policy, including many countries in southwest and Southeast Asia. The Conference was the result of joint efforts between the Government of India, the Global Anti-Monkey Locking Program, and the UN International Drug Management Program. One of the objectives of the Conference is to increase the Community’s commitment to combat money laundering by introducing the necessary opposing measures. The conference was also trying to promote harmony between domestic strategies. The fact that India was one of the sponsors of the Conference indicates the neighboring countries of their determination to fight money laundering.  

Many groups criticize the Government’s efforts of the Indian government, especially on the role that the Government is intended to be assigned to banks. When applying to inform all banks or report all sectors, banks in India must eliminate or completely reverse the tradition of the longest bank. Almost all countries have established an integral anti-monocle rings law that seriously restricted privacy rights. 

Conclusion and Proposals 

In addition to the creation of the law that the money laundering crimes, India also creates a powerful financial compliance program that is difficult to collect money. These reports’ requirements are obliged to report suspicious transactions since it is likely that law enforcement agencies see illegal funds operations.  In addition, financial institutions must train employees to identify suspicious activities. The payment process is the most dangerous. Therefore, if the Bank’s employees can identify the characteristics of the money transaction, they will see more transactions. This training allows the personnel of law enforcement to arrest and process illegal workers. 

In addition, financial institutions in India must incorporate identification requirements, as rules to meet their customers. They should need a financial institution to obtain a large amount of information about their clients to perform the official business. This system will allow banks to access an easier suspicious transaction. The financial institution should renounce the customer’s privacy policy by creating a powerful regulation of the financial institution. To establish a method of integral prestige against the monitor, India must limit the scope of the right to financial privacy. If the Bank must comply with the strict government regulations, it should be able to do so without fear of the future impact on the violation or degradation of the contract.  

Finally, India must negotiate other mutual legal support agreements and other agreements. MLATS is very important in international legal assistance. They complement existing international agreements and allow legal authorities to obtain information on a legal basis in the Indian Tribunal. In addition, when implementing MLATS, India will allow an anti-monitor laundry system to adapt to the particular problem facing the government. If India is trying to suppress the growing problems of medications, decisive action against the provision of money must be made.  



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