Cyber Money Laundering in India, with Reference to Global Money Laundering Laws

Topics: Money laundering, Bank, Bank Secrecy Act Pages: 18 (6692 words) Published: May 19, 2013

Money is like fire, an element as little troubled by moralizing as earth, air and water. Men can employ it as a tool or they can dance around it as if it were the incarnation of a god. Money votes socialist or monarchist, finds a profit in pornography or translations from the Bible, commissions Rembrandt and underwrites the technology of Auschwitz. It acquires its meaning from the uses to which it is put.

Benjamin Franklin said,
“Money has never made man happy, nor will it; there is nothing in its nature to produce happiness. The more of it one has the more one wants”.


• According to Capt. Raghu Raman, “Five types of crimes are now converging. Cyber crimes such as identity theft, illegal access to e-mail, and credit card fraud are coming together with money laundering and terrorist activities. Large amounts of money is now stored in digital form. Now you can transfer money through electronic and online gateways to multiple accounts.” • In the beginning, laundering money was a physical effort. The art of concealing the existence, the illegal source, or illegal application of income, and then disguising that income to make it appear legitimate required that the launderer have the means to physically transport the hard cash. The trick was, and still is, to avoid attracting unwanted attention, thus alerting the Internal Revenue Service (IRS) and other government agencies involved in searching out ill-gotten gains. In what could be described as the “low-tech” world of money laundering, the process of cleaning “dirty money” was limited by the creative ability to manipulate the physical world. Other than flying cash out of one country and depositing it in a foreign bank with less stringent banking laws, bribing a bank teller, or discretely purchasing real or personal property, the classic approach was for a “smurf” to deposit cash at a bank. • Cyber laundering is a new way to hide the proceeds of crime and the advance of technological solutions of electronic payments and online gambling has eliminated the need for time and space as compared to the traditional way of money laundering to achieve Cyber laundering. Countries with bank-secrecy laws are directly connected to countries with bank-reporting laws, making it possible to anonymously deposit “dirty” money in one country and then have it transferred to any other country for use. Depending on which international agency you ask, criminals launder anywhere between $500 billion and $1 trillion worldwide every year. The global effect is staggering in social, economic and security terms. Terrorist funds are recycled in the financial system through a variety of layering techniques which take advantage of regulatory and supervisory weaknesses. • The abuse of the Internet by money launderers is potentially a significant threat. Till date, there are only few criminal cases concerning so called cyber laundering. But there are some symptoms observed by international organizations, law enforcement agencies, financial intelligence units and financial institutions. Criminals have been constantly seeking new ways to clean their illicit gains in order to stay ahead of law enforcement. Similar situation was in case of wire transfers in the 80's and 90's. Due to its decentralized structure, the internet has increasingly become the mechanism of choice of many criminals to channel funds from one global location to another, sometimes in mere minutes and, if handled professionally, without leaving traces. Although the amounts thus shifted are currently thought to be still relatively small compared to the overall volume of funds laundered, the practice of using the internet as a tool to hide the origins of illicit funds is growing fast. And as criminals and terrorists across the world get increasingly cyber-savvy, they make more and more frequently use of the above mentioned advantages of the internet and thus succeed in always staying several...
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