"MONEY LAUNDERING-COMPARATIVE ANALYSIS-THE UK &INDIACOMPARATIVE ANALYSIS BETWEEN BRITISH LAW ANDINDIAN LAW WITH RESPECT TO MONEY LAUNDERINGABSTRACTMoney Laundering is one of the sophisticated crimes existing in the society. It is such a crimethat is not taken seriously by individuals as its criminal results do not impact the society asstreet crimes. The two of the key issues in the developed and developing nations areCorruption and Terrorism that have increased at a rapid rate and have become moresophisticated with developing methods and technology. It is this rapid development that haspaved the way crime under discussion money laundering through corruption for personal gain1 and to further the objectives of terrorist organisations. The reason for selecting the UK andIndia as comparators is because the UK law which is one of the most sophisticated regimes inthe world on this issue still face some challenges because of money laundering and on theother hand India being one of the fastest developing economies and has had serious problems2 with corruption and issues of money laundering. The dissertation is divided into fiveheadings. Chapter 1 of the dissertation provides an introduction to the topic of MoneyLaundering. Chapter 2 explains the process of money laundering in the UK with an essentialfocus on the anti-money laundering laws, followed by money laundering in India underChapter 3. Chapter 4 of the dissertation provides a comparative analysis of laws stated inChapter 2 & 3. Chapter 5 concludes the paper with the view of the writer on the laws and the3 comparative analysis.1Abbia Udofia, Recovering Proceeds of Crime – A Comparative Study of the Nigerian and the UK LegalFramework, September 2012, p. no.12Narendra Modi Government plans to crack down on domestic money laundering, issues answers to FAQs,Source: http://articles.economictimes.indiatimes.com/2015-07-07/news/64178032_1_black-money-revenue- secretary-shaktikanta-das-undisclosed-foreign-assets 3Vijay Kumar Singh,Controlling Money Laundering in India – Problems and Perspectives, p. no 1 Page 1 MONEY LAUNDERING-COMPARATIVE ANALYSIS-THE UK &INDIAKEYWORDSMoney Laundering, The UK, India, Laws, Anti-Money Laundering Laws, Terrorism, Money,Crime, Three stages of Money Laundering, Placement, Layering, Integration, Corruption,Criminal ActivityABBREVIATIONSAML:Anti-Money Laundering LawsBSA: Bank Secrecy ActCJA: Criminal Justice Act 1988, as amended by the CJA 1993 DTA: Drug Trafficking Act 1994 EC: European CommissionEU: European UnionFATF: Financial Action Task ForceGDP: Gross Domestic PriceML: Money LaunderingMLR: Money Laundering Regulations 1993 (SI 1993/1933)NCA: National Crime AgencyPOTA: Prevention of Terrorism (Temporary Provisions) Act 1989, as amended by the CJA1993 UK: United KingdomUNODC: United Nations Office on Drugs and CrimeWTO: World Trade Organisation Page 2 MONEY LAUNDERING-COMPARATIVE ANALYSIS-THE UK &INDIAContentsABSTRACT ................................................................................................................................................ 1KEYWORDS .............................................................................................................................................. 2ABBREVIATIONS ...................................................................................................................................... 2INTRODUCTION ....................................................................................................................................... 4WHAT IS MONEY LAUNDERING .......................................................................................................... 5LITERATURE REVIEW ........................................................................................................................... 9METHODOLOGY ................................................................................................................................ 12MONEY LAUNDERING – THE UK ............................................................................................................ 16HISTORY ............................................................................................................................................ 16MONEY LAUNDERING AS A CRIMINAL OFFENCE .............................................................................. 19ANTI-MONEY LAUNDERING LAWS – THE UK .................................................................................... 22CHALLENGES & RECOMMENDATIONS .............................................................................................. 25CASE STUDY ....................................................................................................................................... 28MONEY LAUNDERING – INDIA .............................................................................................................. 30HISTORY ............................................................................................................................................ 30MONEY LAUNDERING AS A CRIMINAL OFFENCE .............................................................................. 33ANTI-MONEY LAUNDERING LAWS – INDIA ....................................................................................... 36CHALLENGES & RECOMMENDATIONS .............................................................................................. 40CASE STUDY ....................................................................................................................................... 44COMPARATIVE ANALYSIS ON ANTI-MONEY LAUNDERING LAW – THE UK & INDIA ............................. 45COMPARATIVE ANALYSIS .................................................................................................................. 46ACHIEVEMENTS IN THE UK ............................................................................................................... 51ACHIEVEMENTS IN INDIA .................................................................................................................. 54CONCLUSION ......................................................................................................................................... 57BIBLIOGRAPHY ...................................................................................................................................... 60PRIMARY SOURCE ............................................................................................................................. 60LEGISLATION ................................................................................................................................. 60CASE LAWS .................................................................................................................................... 61SECONDARY SOURCE ........................................................................................................................ 61BOOKS ........................................................................................................................................... 61JOURNALS & ARTICLES .................................................................................................................. 62 Page 3 MONEY LAUNDERING-COMPARATIVE ANALYSIS-THE UK &INDIAINTRODUCTIONMoney laundering takes many forms, ranging from simple to very sophisticated forms.Notall countries and societies have taken the issue seriously though in recent times a moresynchronised global approach is evident. But the query under this dissertation is how nationsglobally have tried to resolve the different forms of this crime. It is in the process of findingsolution to this query we begin our dissertation by giving brief introduction on moneylaundering with certain insights on the root cause of all evils – Money such that it would behelpful in free flow of the dissertation. Money has been suggested to be the root of all evilsthat can impact economies around the word either positively or negatively. It is the way4 money is put into use explains its end results. It serves as an essential medium of exchange.There has been a noticeable growth of the financial services globally over the past decades,and this growth was enhanced by the concept of globalisation for developing the financialintermediation. But as every merit has a demerit or disadvantage, the global development alsoresults in cross-border financial crimes.As stated above money can be the root of many criminal activities, it is the way it is put intouse defines whether the act has been criminal or not. If the use of money has been destined toselfish or disruptive means it can result in crimes such as corruption, black marketing, drugs,human trafficking, tax evasion, and this list does not end here as it also results in money5 laundering that serves the financing purpose of terrorism.As termed money is the prime reason for engaging an individual in any form of crime, one ofsuch crime is money laundering. It is termed as a process of exchanging money or assets that4Lewis H. Lapham (b. 1935), U.S. essayist, editor Money and Class in America, ch. 8 (1988), the Columbia Dictionary of Quotations5Halsbury Laws of England, 4th Ed., Vol. 32 para 102 p. 63 Page 4 MONEY LAUNDERING-COMPARATIVE ANALYSIS-THE UK &INDIAhave been gained illegally with proceeds that make them appear to have gained fromlegitimate sources. The main goal of any illegal organisation or an individual is to generatehuge profits without jeopardising the source for gaining such income. The main objective ofthis criminalising money laundering is mainly for generating profits for the group or6 organisation through criminal activity. After a layman?s definition of money laundering, wecontinue to the next section which provides in detail what actually is the process of moneyLaundering with an additional note on the three important stages involved in this process.Defining the process of money laundering with brief understanding of its elements is themain objective in the flow of the dissertation effectively.In addition to discussion of criminal offence of money laundering the current dissertationwould be discussing even the laws implemented by these economies to fight against this7 crime from over a decade followed by a comparative analysis of the same. But, beforeanalysing the laws in these countries it is essential to understand the concept of moneylaundering which conceptually does not have any specific definition, but a descriptivedefinition based on its process.WHAT IS MONEY LAUNDERINGThe word money laundering that was born through the American gangsters in the prohibitionera is associated with many criminal activities such as fraud, drug trafficking, terrorismfinancing, evasion of tax, human trafficking, illegal trade in gold and diamonds, etc., hascome into the limelight of public knowledge from the year 1989 when media exposed the6Saxena Paridhi,Money Laundering in India, NLU, page no. 2; http://www.nja.nic.in/4.1.%20Paper- %20Money%20Laundering_1_%20Paridhi%20Saxena.pdf 7Alkaabi Ali, Mohay George, McCullagh Adrian and Chantler Nicholas, A Comparative Analysis of the Extent ofMoney Laundering in Australia, UAE. UK and the USA, P. no. 1; http://ssrn.com/abstract=1539843 Page 5 MONEY LAUNDERING-COMPARATIVE ANALYSIS-THE UK &INDIAscandal involving enormous amount of money that had been involved in money laundering inassociation with drug trafficking.The concept of money laundering refers to that process where the conversion of illegalmoney into legitimate funds. In the view to hide their association with illegal activities, theindividuals convert the illegally gained money into the legitimate fund through the process of8 money laundering.As per the Interpol definition, money laundering can be termed as such acts that involve in9 protecting the true identity and source income of illegally obtained proceeds. In the words of Robinson, money laundering is called what actually it is because it focuseson what actually takes place under this crime, that is the illegitimate and dirty money gainedthrough illegal forms is converted into legal form. In simple words, the funds that have beenobtained illegally are washed out through certain ordeals for converting the organisation or10 individual funds for making them appear as a legitimate income. INTERPOL defined this offence as, „any form of act or attempted act of concealing ordisguising the origin of the source and converting it from illegitimate source to legitimate11 source.?From the above-given definitions, it can be understood that the prima facia of the process ofmoney laundering is a crime. It is an activity of criminal importance as it enables those8 Section 2(1) (p) of Prevention of Money Laundering Act, 2002 (hereinafter PMLA-02) definesMoneylaundering” has the meaning assigned to it in Section 3.Section 3 provides for offence ofmoneylaundering – whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected with the proceeds of crime and projecting it as untainted property shall be guilty of offence of money laundering.9Connecting Policies For A Safer World, Money Laundering, Interpol10Jeffrey Robinson,The Laundrymen - Inside Money Laundering, The World's Third Largest Business, KindleEdition, 200911Interpol General Secretariat Assembly in 1995 http://www.interpol.int/Crime-areas/Financial- crime/Moneylaundering Page 6 MONEY LAUNDERING-COMPARATIVE ANALYSIS-THE UK &INDIAindividuals and organisations involved in this process generate profits and help these12 individuals from jeopardising their source.Considered to be an organized crime the process of money laundering is not a single act butincludes three steps: Placement, Layering and Integration and the movement of illicit moneythrough these steps is clearly explained in the diagram below:13 In addition to the above-stated process, it is essential to briefly understand the differenttechniques involved in the process of money laundering such as Hawala, StructuringDeposits, Third-Party Cheques, Credit Cards, Peso Broker.The list of these techniques isendless, and certain techniques do not attribute to one phase of money laundering alone but12IMF and World Bank, 201113Source: http://www.igidr.ac.in/money/mfc-11/Singh_Vijay.pdf;http://money.howstuffworks.com/money- laundering3.htm; Page 7 "