Anti-money laundering involves the laws and regulations designed to prevent criminals from generating income through illegal activities. The government has become increasingly vigilant in its effort to curb money laundering by passing anti-money laundering regulations. These regulations require financial institutions to have systems in place to detect and report suspected money laundering activities.

 Indian Mechanisms to Combat Money Laundering:

. Prevention of Money Laundering Act, 2002 (PMLA)

• It is a comprehensive law enacted by the Parliament of India to prevent money-laundering and to provide for confiscation of property derived from money laundering.
• The Act and Rules notified thereunder impose obligation on banking companies, financial institutions and intermediaries to verify identity of clients, maintain records and furnish information in prescribed form to Financial Intelligence Unit – India (FIU-IND).
• It seeks to bring certain financial institutions like Full Fledged Money Changers, Money Transfer Service and Master Card within the reporting regime of the Act.
• It adds a number of crimes under various legislations in Part A and Part B of the Schedule to the Act for the purpose of money-laundering.
• In cases of cross-border money-laundering the Act enables the Central Government to return the confiscated property to the requesting country in order to implement the
provisions of the UN Convention against Corruption.
• The Act prescribes for formation of a three-member Adjudicating Authority for dealing with matters relating to attachment and confiscation of property under the Act.

 Financial Intelligence Unit - India (FIU-IND)

• Financial Intelligence Unit – India (FIU-IND) was set by the Government of India as the central national agency responsible for receiving, processing, analyzing and disseminating information relating to suspect financial transactions. FIU-IND is also responsible for coordinating and strengthening efforts of national and international intelligence, investigation and enforcement agencies in pursuing the global efforts against money laundering and related crimes.
• FIU-IND is an independent body reporting directly to the Economic Intelligence Council (EIC) headed by the Finance Minister.

 Enforcement Directorate:

• It is a government agency responsible for enforcement of the Foreign Exchange Management Act, 1999 (FEMA) and certain provisions under the Prevention of Money
Laundering Act (PML).
• The Directorate is under the administrative control of Department of Revenue for operational purposes; the policy aspects of the FEMA, its legislation and its amendments
are within the purview of the Department of Economic Affairs.

 Global mechanisms to Combat Money Laundering:

Since money laundering is an international phenomenon, transnational co-operation is of critical importance in the fight against this menace. A number of initiatives have been taken to deal with the problem at the international level. The major international agreements addressing money laundering are as:

Vienna convention

It was the first major initiative in the prevention of money laundering held in December 1988. This convention laid down the groundwork for efforts to combat money laundering by obliging the member states to criminalize the laundering of money from drug trafficking. It promotes international cooperation in investigations and makes extradition between member states applicable to money laundering.

The Council of Europe Convention

This convention held in 1990 establishes a common policy on money laundering to facilitate international cooperation as regards investigative assistance, search, seizure and confiscation of the proceeds of all types of criminality, particularly serious crimes such as drug offences, arms dealing, terrorist offences etc. and other offences which generate large profits. It sets out a common definition of money laundering and common measures for dealing with it.

 Basel Committee’s Statement of Principles

In December 1988, the Basel Committee on Banking Regulations and Supervisory Practices issued a statement of principles which aims at encouraging the banking sector to adopt common position in order to ensure that banks are not used to hide or launder funds acquired through criminal activities.

The Financial Action Task Force (FATF)

The FATF is an inter-governmental body established at the G7 summit at Paris in 1989 with the objective to set standards and promote effective implementation of legal, regulatory and operational measures to combat money laundering and terrorist financing and other related threats to the integrity of the international financial system. It has developed a series of Recommendations that are recognized as the international standards for combating money laundering and the financing of terrorism. They form a basis for a co-ordinated response to these threats to the integrity of the financial system and help ensure a level playing field.

United Nations Global Programme Against Money Laundering (GPML)

GPML was established in 1997 with a view to increase effectiveness of international action again money laundering through comprehensive technical cooperation services offered to Governments. The programme encompasses following 3 areas of activities, providing various means to states and institutions in their efforts to effectively combat money laundering.

Three further Conventions have been adopted for Money Laundering related crimes:

1. International Convention for the Suppression of the Financing of Terrorism(1999)
2. UN Convention against Transnational Organized Crime (2000)
3. UN Convention against Corruption (2003)

Other Organization and Initiatives against Anti-Money-Laundering (AML)

• International Money Laundering Information Network (IMoLIN) o IMoLIN is an Internet-based network assisting governments, organizations and individuals in the fight against money laundering and administered by UN office on Drugs and Crime.
o It provides with an international database called Anti-Money Laundering International Database (AMLID) that analyses jurisdictions' national anti-money laundering legislation.

• Egmont Group of Financial Intelligence Units
o The Egmont Group is the coordinating body for the international group of Financial Intelligence Units (FIUs) formed in 1995 to promote and enhance internationa cooperation in anti-money laundering and counter-terrorist financing.
o The Egmont Group consists of 108 financial intelligence units (FIUs) from across the world. Financial intelligence units are responsible for following the money trail, to counter money laundering and terrorism financing.
o FIUs participating in the Egmont Group affirm their commitment to encourage the development of FIUs and co-operation among and between them in the interest of
combating money laundering and in assisting with the global fight against terrorism financing.

• Asia-Pacific Group on Money Laundering (APG)
o The Asia/Pacific Group on Money Laundering (APG) is an international organisation consisting of 38 member countries/jurisdictions and a number of international and
regional observers including the United Nations, IMF and World Bank.
o All APG members commit to effectively implement the FATF's international standards for anti-money laundering and combating financing of terrorism referred to as the
40+9 Recommendations. Part of this commitment includes implementing measures against terrorists listed by the United Nations in the "1267 Consolidated List”.

Way forward

• Implement procedures for Anti Money Laundering provisions as envisaged under the Prevention of Money laundering Act, 2002. Such procedures should include inter alia, the following three specific parameters which are related to the overall 'Client Due Diligence Process:
o Policy for acceptance of clients.
o Procedure for identifying the clients.
o Transaction monitoring and reporting especially suspicious transactions
• Bankers also has vital role and without their involvement, the operation cannot be successful.
• The global nature of money laundering requires international law enforcement cooperation to effectively examine and accuse those that initiate these complex criminal organizations.