The Role of Rbi in Prevention of Money Laundering
AUTHOR:R.BALAJI, M.Com,MBA,M.Phil, (Ph.D),
ABSTRACT
Money Laundering is a highly sophisticated act to cover up or camouflage the identity/ origin of illegally obtained earnings so that they appear to have derived from lawful sources. It is the process by which illegal funds and assets are converted into legitimate funds and assets. In other words, it is the process used by criminals to wash their “tainted” money to make it “clean. Several regulatory and governmental authorities cite figures for estimated amounts of Money laundered annually, either worldwide or within a national economy. International Monetary Fund’s estimated that the aggregate of money laundering in the world could be approximately 2-3% of world’s gross domestic product (GDP) or US$ 500 billion- 1.5 trillion. The trustworthiness of the banking and financial system depends heavily on legal, professional and ethical skeleton in which it works. As a result the International organizations and regulators started developing international standards and best practices to address to money laundering issues in a collaborative manner. Across the world, banks and financial institutions are required to initiate and execute systems to prevent anti-social elements from using banking channels for money laundering. Implementation of apt ‘Know Your Customer measures’ is a vital element of risk management in banks, in order to protect the confidence and the authenticity of banking systems. The role of RBI in India in containing this social and financial menace has been phenomenal. This paper has analysed the various facets of this newly emerging evil and also examined critically the various measures taken by RBI and Government of India in handling this evil with iron hand, finally suggesting the strategies and proactive measures to be adopted further to remove this money laundering in its root.
MONEY LAUNDERING ➢ Money
ABSTRACT
Money Laundering is a highly sophisticated act to cover up or camouflage the identity/ origin of illegally obtained earnings so that they appear to have derived from lawful sources. It is the process by which illegal funds and assets are converted into legitimate funds and assets. In other words, it is the process used by criminals to wash their “tainted” money to make it “clean. Several regulatory and governmental authorities cite figures for estimated amounts of Money laundered annually, either worldwide or within a national economy. International Monetary Fund’s estimated that the aggregate of money laundering in the world could be approximately 2-3% of world’s gross domestic product (GDP) or US$ 500 billion- 1.5 trillion. The trustworthiness of the banking and financial system depends heavily on legal, professional and ethical skeleton in which it works. As a result the International organizations and regulators started developing international standards and best practices to address to money laundering issues in a collaborative manner. Across the world, banks and financial institutions are required to initiate and execute systems to prevent anti-social elements from using banking channels for money laundering. Implementation of apt ‘Know Your Customer measures’ is a vital element of risk management in banks, in order to protect the confidence and the authenticity of banking systems. The role of RBI in India in containing this social and financial menace has been phenomenal. This paper has analysed the various facets of this newly emerging evil and also examined critically the various measures taken by RBI and Government of India in handling this evil with iron hand, finally suggesting the strategies and proactive measures to be adopted further to remove this money laundering in its root.
MONEY LAUNDERING ➢ Money