"Money laundering is the illegal process of concealing the origins of money obtained illegally by passing it through a complex sequence of banking transfers or commercial transactions."
Money laundering typically includes three stages: placement, layering and integration stage.
✏️Placement is the first step of money laundering which is the process of moving the money into the legitimate source via financial institutions, casinos, financial instruments etc. and at the same time, hiding its source.
✏️The second stage is “layering”, also referred as “structuring stage”. It breaks the funds into small transactions and makes it difficult to detect and find out about the laundering activity. It usually entails international money movement, so the law enforcement agencies won’t be able to track the financial gains from illegal proceedings so easily.
✏️The third stage is Integration stage, In this stage, money is now returned to the criminals legitimately after it has been placed in the financial system, often breaking it into different multiple smaller financial transactions. Criminals can now retrieve their illicit funds in a legal way after fully integrating them into a legitimate source, and are able to use them for any purpose.
"Anti-money laundering (AML) refers to the laws, regulations and procedures intended to prevent criminals from disguising illegally obtained funds as legitimate income."
⏺Prevention of Money Laundering Act (PMLA), 2002 is an Act of the Parliament of India enacted by the government to prevent money-laundering and to provide for confiscation of property derived from money-laundering. PMLA and the Rules notified there under came into force with effect from July 1, 2005.
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