Money Laundering in India

Certified Anti Money Laundering Expert is becoming one of the most sought after certifications in Indian banks and outsourcing companies. Know more about the techniques, syllabus and concepts.

How do we define Money Laundering ?

Money Laundering in simple terms is moving money without documents. Laundering money involves using existing payment channels, to funnel the money across. Money Laundering is process of changing color from black to white.

With the evolution of technology, the process of laundering is evolving. Growing reliance on technology helps the criminals to maintain the black color of money. However, money is transported out of the country in same color.

Traditionally money laundering has been described as a process which takes place in three stages.

  1. Placement is the stage where proceeds of crime are introduced in the financial system.
  2. Layering is the stage where the source of money is ‘washed’ and its ownership is disguised.
  3. Integration is the stage where the ‘laundered’ money is transferred to the beneficiary's bank account.

There is no standard definition of money laundering applicable in all countries. Tax avoided money may be considered illegal in some financial systems like US or India. However in Middle Eastern countries there are no taxes.

Stringent laws around the money laundering offenses require the financial institutions to be vigilant. It is wrong for financial institutions to assist criminals to gain from the proceeds of criminal activity. Regulations require the banks to keep an eye on the money obtained from the proceeds of crime. Banks and financial institutions should restrain the criminals from using the bank accounts to make profits on the criminal proceeds.

Money obtained from organized crimes, drug trafficking, terrorism, fraud, robbery, gambling, arms trafficking is “dirty”. It needs to be cleaned. So that banks and other financial institutions deal with it without suspicion. Money can be laundered by many methods, which vary in complexity and sophistication.

Techniques of Money Laundering in India

There are several ways to launder money. The most popular technique is the establishment of the fake companies also known as the shell companies. Most of these Shell Companies are regular in complying with Government of India. In reality these companies do not exist.

Shell companies sell no goods or services. Actually these shell companies exist only on paper, not in the real world. These shell companies are used for layering the money from various accounts. Layering plays important role in disguising the source of money.

Many times Shell Company’s balance sheets are cooked to look healthy. So that banks can lend money on the basis of financial statements. Book entries are passed to obtain tax exemption from the government. Government of India penalized millions of shell companies in the year 2017. Most of the non-compliant companies were removed from the government registry.

There is difference between shell and defunct companies, though both are techniques of laundering. Besides transacting through shell company, there are many other money laundering techniques such as:

Cash incentive businesses in India are found to be susceptible to money laundering. These businesses are used as the tool of moving money through the banking channels.

Premier AML Certification

To simplify the compliance requirements and to build the capacity of compliance professionals, Indiaforensic started certification programs in the year 2008. This program focuses more on identification of suspicious financial transactions than only KYC aspect of Regulations. Anti Money Laundering (AML) laws in India have evolved in last decade. AML Laws were amended with changing nature of transactions.

Certification in Anti-Money Laundering is an endeavor to meet the growing demand of the skilled resources for the Regtech companies. This is an exhaustive syllabus which covers gamut of areas such as corporate structuring, shell of companies and real estate. It elaborates different techniques of combating money laundering with the aid of technology. There is increased activity of laundering the dirty money through legitimate business.

CAME is preferred certification program in the technology companies. Certification completion process is pretty fast and swift.

Students need to register for the course and pay the fees. Once the material is received students have to prepare for final exam. Preparation material is sent at given address and the examination is completed online. The successful students are then issued the CAME certification.

More than 1000 students have completed this program. Many of these students are working in the Multi National Banks or with the Large outsourcing companies. Aspirants learn from the experiences of the successful professionals. Many professionals claim that 90 days of study is essential to clear exams in first attempt. Some students offered top five recommendations to pass the uniform CAME Exams.

Global Compliance

CAME program is designed on Prevention of Money Laundering Act 2002 (PMLA) and other laws in India. The program goes beyond the concepts of black money. However, it addresses global developments in the compliance world such as

  1. Financial Action Task Force (FATF) Provisions
  2. Foreign Account Tax Compliance Act (FATCA)
  3. Banking Secrecy Act

One of the key differentiation of this program is the elaboration of the complicated concepts in visually simplified manner. CAME is one of those certifications which are crucial for not only regtech community but also for law enforcement. It covers topics that discuss using the technologies such as Machine Learning or Artificial Intelligence. Tools like End Use Monitoring systems developed by the  companies help the financial institutions to ascertain the flow of money

Another major area of the CAME Program is to elaborate the definition and role of Politically Exposed Persons. Every country has its own mechanism to define this term, Indian regulators have broadly defined the Politically Exposed Persons.

Indiaforensic offers certification in Trade Based Money Laundering (TBML). Trade Based Money Laundering is important in the wake of sanctions on various countries by United States of America. Compliance with Sanctions has proved to be a costly affair for the international banks. Regulators have imposed heavy fines on the international banks for not complying with the provisions of the Sanctions. TBML is becoming popular because of the huge amounts of money involved in the trade.

Indiaforensic created a dedicated education series on Heightened Risk Entities, which is an integral part of Know Your Customer Program (KYC).

These entities pose significant risk before the banking sector. Indiaforensic classifies these Heightened Risk Entities using different global parameters.

Customers from high risk countries or having dubious transactions are treated with caution.Customers having complex beneficial ownership structure are classified as high risk in most of the banks.

All these entities are required to be identified during the process of on-boarding. Knowing these customers before dealing with them is one of the best risk management strategies for the banks. Failure to identify the heightened risk entities have resulted in heavy fines for the financial institutions.

Penal actions against the multinational banks have created the demand for certified professionals. They scan international transactions from the money laundering perspective. They find out anomalies in the transactions. Certified compliance professionals ensure that money is received from legitimate sources.

Started in 2008, Certified Anti Money Laundering Expert is the preferred certification for the professionals looking at challenging career options. Bankers and Outsourcing companies handling the compliance process for multinational banks find this certification program crucial for their employees.

If you are looking at career in anti money laundering, please feel free to contact Rajendra on +91-9766594401. Becoming a certified member will give you access to a wealth of knowledge, tools, resources to develop your career. Being a Certified Anti Money Laundering Expert demonstrates commitment to the highest standards. Your professional reputation and employ-ability increases with the four letters CAME behind your name.