How Emerging Technologies and Globalisation Contribute to Money Laundering

How Emerging Technologies and Globalisation Contribute to Money Laundering

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Money Laundering is the process of hiding the origins of unlawfully obtained funds so they look to have come from reliable sources. Criminals frequently utilise money laundering to cover up their unlawful funds, terrorists to evade capture, or tax evaders to avoid detection.

The following ways that emerging technologies aid in money laundering:

• The use of alternative forms of payment and cryptocurrencies that are not governed by governments

• Conversations that are encrypted make it easier to share financial information.

• Structured portions of layered money are concealed by a high volume of digital transactions at online marketplaces.

• Identity theft, such as when credit card data is stolen is employed to cover untraceable identities with fraudulent money.

The following factors influence money laundering as a result of globalisation:

• The inclusion of money in the world financial system causes coordination issues between various countries.

• Tax haven nations like Panama and Cayman Island and others have built their economies around providing support for tax evasion.

• Asset distribution across borders shields individuals from retaliatory government action.

To combat money laundering, the following national and international measures have been implemented:

• The Prevention of Money Laundering Act (PMLA), passed in 2002, created the legislative framework for this purpose. Money laundering is made a punishable, non-bailable offence.

• Property acquired from drug trafficking or smuggling is punishable under the Narcotic Drugs and Psychotropic Substances Act of 1985 and the Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act of 1976.

• In order to combat money laundering, national and international intelligence, investigation, and enforcement agencies coordinate their activities through the Financial Intelligence Unit - India (FIU-IND).

• The KYC requirements and RBI regulations are periodically updated to reflect changing money laundering threats and techniques.

• States that have ratified the Vienna Convention are required to make money laundering from drug trafficking illegal.

• The Financial Action Task Force (FATF) establishes guidelines and encourages the effective application of judicial, administrative, and operational measures to combat money laundering and the funding of terrorism.

• The convention against money laundering has been accepted by the OECD forum. On the basis of information obtained from FIUs, it provides adequate safeguards and access to tax administration in cases of suspicious transactions.

In conclusion, it must be noted that money laundering is a worldwide threat that demands global action to stop. To reduce the threat of money laundering, nations and financial institutions must cooperate with one another and deploy technology countermeasures like big data and artificial intelligence.