Page 26 - Banking Finance February 2025

ARTICLE

Decoding

Financial Crime

of Money

Laundering Rahul Sharma
AGM (Faculty)
State Bank Foundation Institute
CHETNA, Indore, (M.P.)

A Abstractbstract
Abstract t
A Ab
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bstract
This article is about the definition & concept of financial crime of money laundering. The article explains the
different stages involved in the entire process of money laundering. Impact of money laundering on economic
stability, social governance on the jurisdiction prone to money laundering. Criminal money, once assimilated in
the formal economy, negatively affects the reputation, and social & financial fabric of these jurisdictions. To
prevent criminals from using the financial system, financial institutions need to have a robust 'Anti Money
Laundering (AML)' Compliance system & procedures.
There are various organizations who monitor the progress and implementation of AML Compliance in different
jurisdictions. According to the strength of their AML compliance system and procedures, these jurisdictions are
categorised in different risk categories regarding money laundering risk.

Introduction: f. Corruptions & fraud
Financial crimes involve illegal activities that result in
In this article we shall decode the financial crime of money
financial gain at the expense of other persons involved in laundering. This financial crime is still a cause of concern
financial transactions. These crimes often encompass because of periodic incidents like Panama Papers leaks, Swiss
deception, manipulation, misuse, or abuse of financial Leaks, failures of financial institutions, and turbulent
systems. Financial crimes are usually non-violent in nature, economies of certain countries.
but they can have enormous economic impacts & trust
deficits in financial system as well as in regulatory
institutions. According to the Financial Action Task Force Definition of Money Laundering:
(FATF), some of the major financial crimes are as under: Initially the idea of money laundering was the conversion of
a. Money Laundering ill-gotten money into legitimate money. This conversion was
merely considered as a crime of tax evasion only.
b. Terrorist Financing
c. Organised Crimes
In the year 2000, United Nations in its convention against
d. Trafficking of humans & narcotics drugs organised crimes, popularly known as "Palermo
e. Sexual exploitation of children & women Convention", money laundering was defined:

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