Money Laundering

>> September 9, 2011


Money laundering is prominent term in the area of banking and finance. As a finance student, you should understand this concept even it is not part of your course because this concept may be used in your future profession.

Money Laundering Simple Definition 

Suppose, a robber has killed 100 of people and collected $ 200 billion, then he went to his 100 friends and contracted
 with him. 
He will give his illegal money to them. They will deposit this money in their name in their bank accounts. After sometime, this money is used for his illegal purpose. In simple words, this contract is money laundering.

In simple words, money laundering is the process in which a cheater converts illegal money into legal money. In other words, money laundering is the way in which somebody try to show that money is earned with legal source but in reality source of this money is illegal.

Deep Explanation of Money Laundering 

In deep explanation, money laundering includes to purchase illegal money and to process or transfer of money of crime. In Indian to show illegal money as legal money in the form of money laundering is criminal and legal offence. According to Prevention of Money Laundering Act 2002, if anybody captures in money laundering, he or she will have to give penalty of Rs. 500000 and he will have to rest in jail for 3 to 7 years.

Strict Rules for Banking For Preventing Money Laundering 

Bank accountant must record all the transactions whose amount will be more than Rs. 10 Lakhs. Bank accountant must maintain this records for 10 years. Banks will also make cash transaction report (CTR) and Suspicious transactions report whose amount is more than RS. 10 Lakhs with in 7 days of doubt. This report will be submitted to enforcement directorate and income tax department. 





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