Subject: Internal Security

Money laundering has evolved significantly with technological advancements and globalization, posing new challenges to financial security. The rise of cryptocurrency transactions worth $22.2 billion in illicit funds (2023) highlights the growing complexity of this threat.

Impact of Technology and Globalization on Money Laundering

• Digital Payment Systems: Emergence of UPI, digital wallets, and online banking has created new vulnerabilities for money laundering through layering and integration techniques.

• Cryptocurrency Exploitation: Criminals utilizing blockchain technology and crypto assets for laundering, with illicit addresses receiving estimated $40.9 billion in 2024.

• Cross-Border Transactions: Globalization enabling rapid movement of illegal funds across jurisdictions through shell companies and complex corporate structures.

• Cyber-Enabled Fraud: Integration of artificial intelligence and automation tools facilitating sophisticated money laundering schemes through multiple jurisdictions.

National Level Measures

• Legislative Framework: Strengthening of Prevention of Money Laundering Act (PMLA) to include chartered accountants, company secretaries, and cryptocurrency intermediaries.

• Regulatory Oversight: Enhanced monitoring through Financial Intelligence Unit (FIU-IND) and implementation of strict Know Your Customer (KYC) norms.

• Digital Surveillance: Deployment of advanced analytics and AI-based monitoring systems by financial institutions to detect suspicious transactions.

• Capacity Building: Training of law enforcement agencies in cyber forensics and digital financial investigation techniques.

International Cooperation Measures

• Global Partnerships: India's active participation in Financial Action Task Force (FATF) and bilateral cooperation with countries like France for information sharing.

• Information Exchange: Implementation of Mutual Legal Assistance Treaties (MLATs) for cross-border investigation and prosecution.

• Standardized Protocols: Adoption of international AML/CFT standards and best practices across financial institutions.

• Joint Operations: Conducting coordinated investigations with international agencies to disrupt transnational money laundering networks.

The fight against money laundering requires a multi-pronged approach combining technological innovation with international cooperation. Success stories like the implementation of Project Insight by Income Tax Department and India's compliance with FATF recommendations demonstrate the effectiveness of coordinated action against financial crimes.