Latest: Corruption and Money Laundering.
Sleepless Nights, a gift to Money Launderers
(Strictly for educational Purpose only)
Sleepless Nights, a gift to Money Launderers
(Strictly for educational Purpose only)
When the Hon. PM announce the demonetization of 1000 Rupees and 500 Rupees notes the entire country was shocked, and most importantly those people who are stock piling black money had a sleepless night.
"If we have to nab a thief, there is not logic of informing the thief about the plan."
In the announcement, Hon. PM said that the step to demonetize those notes is to fight terror funding, black money and fake notes.
The article will show an aspect where the demonetization will help in fighting money laundering.
Money laundering is a process of converting a black money/illegal money into white money. Black money or illegal money means the money which a person acquired through illegal means.
Here we are going to discuss about how the black or illegal money is converted into white money.
First of all, a person (a criminal or a politician or a bureaucrat or a business man) earns black money through different illegal ways like extortion, bribery, corruption, smuggling, selling drugs etc. and he collects all those money as one.
Then the he will start dividing the money into smaller denominations.
Example,
If he earns 1 Crore Rupees, he will divide the amount as
10 Lakhs + 15 Lakhs + 5 Lakhs + 20 Lakhs + 2 Lakhs + 7 Lakhs + 1 Lakh + 17 Lakhs + 13 Lakhs + 6 Lakhs + 4 Lakhs
Now he will start using this smaller amounts into different ways like buying investing in share markets, buying jewelries, buying apartments, opening fixed deposit account in bank etc. In the process, he will start investing the black money into market.
The process of investing the black money into the market is known as Placement.
After the step of placement, he will start Layering.
In this step, he will take back his money from a unit in which he invests and he will again invest the amount into some other unit. Likewise, all the investments will be taken back to invest in some other units again.
So, he will make layers of investments one over another by his black money.
After years of layering he will at last start disinvesting his money from all the units, this step is called Integration. When he integrates the whole of 1 crore Rupees which he earns from illegal activities, the money will become a white money because the money has layers of legal sources and he can deposit the whole amount in the bank.
The policy of demonetization will stop the money launderers in the first step that is placement. He will not be able to invest his money in any units and demonetization compels him to go directly to bank for the deposit. Here the intelligence agency will be alerted and he will be book immediately, as the source of the money is not legal.
We all know that politicians corrupt, bureaucrats take bribes and anti-national elements use extortion, drug mafia, smuggling of illegal things as a mode to franchise their units. All these malpractices will be stopped by the demonetization.
The step creates a panic to common people of India and also it creates an economic standstill for a moment in the country, but those effects won't last long. So better not to get panicked, no one will lose even a single penny he/she saves and the economic activities will be stabilized very soon.
It is true that demonetization will help in curbing corruption and other illegal trade practices. So, we need to cooperate our government in fighting black money, terror funding and fake notes to shape a brighter future.
"If we have to gain something great in the near future, we have to sacrifice something now."
"If we have to nab a thief, there is not logic of informing the thief about the plan."
In the announcement, Hon. PM said that the step to demonetize those notes is to fight terror funding, black money and fake notes.
The article will show an aspect where the demonetization will help in fighting money laundering.
Money laundering is a process of converting a black money/illegal money into white money. Black money or illegal money means the money which a person acquired through illegal means.
Here we are going to discuss about how the black or illegal money is converted into white money.
First of all, a person (a criminal or a politician or a bureaucrat or a business man) earns black money through different illegal ways like extortion, bribery, corruption, smuggling, selling drugs etc. and he collects all those money as one.
Then the he will start dividing the money into smaller denominations.
Example,
If he earns 1 Crore Rupees, he will divide the amount as
10 Lakhs + 15 Lakhs + 5 Lakhs + 20 Lakhs + 2 Lakhs + 7 Lakhs + 1 Lakh + 17 Lakhs + 13 Lakhs + 6 Lakhs + 4 Lakhs
Now he will start using this smaller amounts into different ways like buying investing in share markets, buying jewelries, buying apartments, opening fixed deposit account in bank etc. In the process, he will start investing the black money into market.
The process of investing the black money into the market is known as Placement.
After the step of placement, he will start Layering.
In this step, he will take back his money from a unit in which he invests and he will again invest the amount into some other unit. Likewise, all the investments will be taken back to invest in some other units again.
So, he will make layers of investments one over another by his black money.
After years of layering he will at last start disinvesting his money from all the units, this step is called Integration. When he integrates the whole of 1 crore Rupees which he earns from illegal activities, the money will become a white money because the money has layers of legal sources and he can deposit the whole amount in the bank.
The policy of demonetization will stop the money launderers in the first step that is placement. He will not be able to invest his money in any units and demonetization compels him to go directly to bank for the deposit. Here the intelligence agency will be alerted and he will be book immediately, as the source of the money is not legal.
We all know that politicians corrupt, bureaucrats take bribes and anti-national elements use extortion, drug mafia, smuggling of illegal things as a mode to franchise their units. All these malpractices will be stopped by the demonetization.
The step creates a panic to common people of India and also it creates an economic standstill for a moment in the country, but those effects won't last long. So better not to get panicked, no one will lose even a single penny he/she saves and the economic activities will be stabilized very soon.
It is true that demonetization will help in curbing corruption and other illegal trade practices. So, we need to cooperate our government in fighting black money, terror funding and fake notes to shape a brighter future.
"If we have to gain something great in the near future, we have to sacrifice something now."
* Leishangthem Roshan Meetei wrote this article for e-pao.net
The writer can be contacted at leishangthemroshan1(AT)gmail(DOT)com
This article was posted on November 12, 2016.
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