Subject: Internal Security

According to the Financial Intelligence Unit-India (FIU-IND), the detection of ₹11,000 crore in undisclosed income and seizure of assets worth ₹983.4 crore in 2024 highlights the persistent challenge of money laundering that threatens India's economic stability and national security.

Significance of Money Laundering for India

• Economic Impact:

  • Undermines financial stability by distorting market competition and resource allocation.
  • Creates parallel economy leading to tax revenue losses and reduced government spending capacity.

• National Security Concerns:

  • Facilitates terror financing and organized crime networks.
  • Weakens border security through hawala networks and illegal cross-border transactions.

• International Relations:

  • Affects India's global reputation and Foreign Direct Investment (FDI) inflows.
  • Impacts compliance with Financial Action Task Force (FATF) recommendations.

Steps Required to Control Money Laundering

• Legislative Measures:

  • Strengthening Prevention of Money Laundering Act (PMLA) implementation.
  • Recent amendments bringing cryptocurrency and virtual digital assets under AML laws.
  • Including professionals like chartered accountants and company secretaries under PMLA scope.

• Technological Solutions:

  • Implementation of Artificial Intelligence for suspicious transaction detection.
  • Enhanced Know Your Customer (KYC) norms using digital verification.
  • Integration of blockchain technology for transparent financial tracking.

• Institutional Framework:

  • Strengthening coordination between FIU-IND, Enforcement Directorate, and other agencies.
  • Capacity building of financial investigators and regulatory authorities.
  • Enhanced international cooperation through Mutual Legal Assistance Treaties (MLATs).

• Preventive Measures:

  • Regular audits and compliance checks of financial institutions.
  • Public-private partnerships for information sharing.
  • Awareness campaigns about money laundering risks and reporting mechanisms.

The recent success in detecting undisclosed income and criminal proceeds demonstrates India's commitment to combating money laundering. However, continuous evolution of anti-money laundering frameworks, coupled with international cooperation and technological integration, remains crucial for effectively addressing this menace and ensuring economic sovereignty.