Model Question and Answers for APSC | Discuss how emerging technologies and globalisation contribute to money laundering. Elaborate measures to tackle the problem of money laundering both at national and international levels.
Ans : Money Laundering is to ensure that the money that has been acquired illegally appears to have been obtained legitimately. In simpler terms, it is the process of turning the profit of illegal activity into a legitimate income.
Emerging technologies and globalisation contribute to money laundering:
1. Rapid developments in financial information, technology and communication allow money to move anywhere in the world with speed and ease. This makes the task of combating money-laundering more urgent than ever.
2. The deeper “dirty money” gets into the international banking system, the more difficult it is to identify its origin.
3. There have been a number of developments in the international financial system during recent decades that have made the three F’s-finding, freezing and forfeiting of criminally derived income and assets-all the more difficult.
4. These are the “dollarization” (i.e. the use of the United States dollar in transactions) of black markets, the general trend towards financial deregulation, the progress of the Euromarket and the proliferation of financial secrecy havens.
5. Fuelled by advances in technology and communications, the financial infrastructure has developed into a perpetually operating global system in which “megabyte money” (i.e. money in the form of symbols on computer screens) can move anywhere in the world with speed and ease.
6. Things like dark web and Bitcoin further facilitate money laundering
Measures to tackle the problem of money laundering both at national and international levels
1. Strengthen domestic laws
2. Regulate cryptocurrencies and dark web
3. Act on panama papers with transparent enquiry into allegations
4. The Vienna Convention
5. Enforce the Financial Action Task Force guidelines
6. International bodies like the IMF, United Nations office on Drugs and Crime need totake proactive steps to comply with international standards and thwart terrorist financing.