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Case Study

In a small branch of big bank advances shot up 100% in a particular year. Loan portfolio contained bill discounted. The perpetrator of the fraud in collusion with the branch manager opened 36 different Inland Letter of Credit and Bill discounted. The bills were raised on one party by other and circular reference was never completed. Every company had different management but the fraud was unearthed when the Demand Draft of three parties was collected by a single person


Money Laundering and IT
  • What is Money Laundering ?

Money laundering is the process by which large amounts of illegally obtained money (from drug trafficking, terrorist activity or other serious crimes) is given the appearance of having originated from a legitimate source.

  • How big is the problem ?

Estimates of the size of the money laundering problem ranges between $590 billion - $1.5 trillion annually.This is a staggering amount and detrimental by any calculation to the financial systems involved

  • What are the steps in Money Laundering ?

Money laundering is not a single act but is in fact a process that is accomplished in three basic steps. These steps can be taken at the same time in the course of a single transaction, but they can also appear in well separable forms one by one as well. The steps are:-


Layering; and



  • What are the different methods ?
  • Placement

    Cash paid into bank (sometimes with staff complicity or mixed with proceeds of legitimate business

    Cash used to buy high value goods, property or business assets.

  • Layering

    Wire transfers abroad (often using shell companies or funds disguised as proceeds of legitimate business

    Cash deposited in overseas banking system

  • Integration

    False loan repayments or forged invoices used as cover for laundered money

    Income from property or legitimate business assets appears "clean".


Owning a bank, is a classic means to launder huge sums of money. In Russia and some East European States, banks can be readily purchased for very little money- though few of them have electronic banking access to SWIFT

2004-2006 Indiaforensic Research Foundation,Pune,India