{"id":79857,"date":"2026-07-22T18:21:23","date_gmt":"2026-07-22T12:51:23","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=79857"},"modified":"2026-07-22T18:22:38","modified_gmt":"2026-07-22T12:52:38","slug":"money-laundering-india","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/22-07-2026\/money-laundering-india","title":{"rendered":"Money Laundering\u00a0"},"content":{"rendered":"\n<p><strong>Syllabus: GS3\/Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The<strong> Directorate of Enforcement (ED) <\/strong>has launched a<strong> money-laundering investigation<\/strong> into an alleged $35 million cryptocurrency over-the-counter (OTC) trading scam.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Money Laundering<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Money laundering <strong>disguises financial assets <\/strong>while protecting the illegal activity that produced them.\u00a0<\/li>\n\n\n\n<li>The prevention of money laundering has become an international effort that includes terrorist funding among its targets.<\/li>\n\n\n\n<li><strong>3 Stages of Money Laundering:\u00a0<\/strong><\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter size-large is-resized\"><img data-dominant-color=\"e8e8e7\" data-has-transparency=\"false\" loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-209-1024x576.png\" alt=\"money laundering cycle\" class=\"not-transparent wp-image-79858\" style=\"--dominant-color: #e8e8e7; width:554px;height:auto\" srcset=\"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-209-1024x576.png 1024w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-209-300x169.png 300w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-209-768x432.png 768w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-209-1536x864.png 1536w, https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2026\/07\/image-209.png 1920w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n<\/div>\n\n\n<h2 class=\"wp-block-heading\"><strong>How Does Money Laundering Impact?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Impact on Economy:<\/strong> Money laundering undermines the integrity of the financial system by <strong>introducing unaccounted and illegal funds into formal channels.\u00a0<\/strong>\n<ul class=\"wp-block-list\">\n<li>This can lead to<strong> distortions in interest rates, exchange rates, and capital markets.\u00a0<\/strong><\/li>\n\n\n\n<li>It also <strong>discourages foreign direct investment (FDI), <\/strong>as investors perceive higher risks in economies affected by weak financial transparency.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Impact on Public Welfare:<\/strong> Money laundering results in<strong> significant loss of tax revenue for the government,<\/strong> increasing fiscal pressure and reducing funds available for public welfare programs.\n<ul class=\"wp-block-list\">\n<li>Corruption supported by illicit funds erodes public trust in democratic institutions and governance.\u00a0<\/li>\n\n\n\n<li>Illicit money often<strong> flows into sectors such as<\/strong> real estate, causing <strong>artificial inflation of asset prices <\/strong>and making housing unaffordable for genuine buyers.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Role in Crime and Corruption: <\/strong>Laundered money fuels <strong>organized crime, drug trafficking, terrorism financing, and large-scale corruption.<\/strong>\n<ul class=\"wp-block-list\">\n<li>It enables criminal networks to expand and operate with greater financial strength.\u00a0<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Emerging Challenges&nbsp;<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Digital Banking: <\/strong>With the rise of online banking, digital payment platforms, and peer-to-peer transactions, it has become <strong>harder to spot illegal financial activity.\u00a0<\/strong>\n<ul class=\"wp-block-list\">\n<li>As financial services become faster and more interconnected, identifying suspicious behavior requires monitoring patterns across multiple channels rather than individual transactions.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li><strong>Cryptocurrencies: C<\/strong>ryptocurrencies are not completely anonymous, but they can offer more privacy than regular payment systems.\n<ul class=\"wp-block-list\">\n<li>Because of this, regulators have increased oversight and reporting rules for digital asset service providers to prevent misuse while still allowing legal innovation.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>The Prevention of Money-Laundering Act (PMLA)<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>It was enacted under<strong> Article 253 of the Constitution in 2002<\/strong> to prevent money laundering and provide for the confiscation of property derived from or involved in money laundering.<\/li>\n\n\n\n<li>It came into force from <strong>2005<\/strong>, and it was further amended in<strong> 2009 and in 2012.<\/strong><\/li>\n\n\n\n<li><strong>The offence under the PMLA<\/strong> mainly involves money laundering obtained through criminal activities (e.g., drug trafficking, terrorism, corruption).<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>About Directorate of Enforcement (ED)<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Established:<\/strong> It was established in<strong> 1956<\/strong> with the formation of an <strong>&#8216;Enforcement Unit&#8217; <\/strong>under the aegis of the <strong>Department of Economic Affairs <\/strong>and handles Exchange Control Laws violations under <strong>Foreign Exchange Regulation Act, 1947 (FERA 1947).\u00a0<\/strong>\n<ul class=\"wp-block-list\">\n<li>A year later, the Enforcement Unit was renamed the Enforcement Directorate.\u00a0<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>It is a<strong> multi-disciplinary organization<\/strong> mandated with<strong> investigation of the offence of money laundering and violations of foreign exchange laws.\u00a0<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>The statutory functions of the Directorate<\/strong> include enforcement of following Acts:<\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>The Prevention of Money Laundering Act, 2002 (PMLA): <\/strong>It is a<strong> criminal law <\/strong>enacted to prevent money, ED has been given the responsibility to enforce the provisions of the PMLA.<\/li>\n\n\n\n<li><strong>The Foreign Exchange Management Act, 1999 (FEMA):<\/strong> It is a <strong>civil law <\/strong>enacted to consolidate and amend the laws relating to facilitate <strong>external trade and payments.<\/strong><\/li>\n\n\n\n<li><strong>The Fugitive Economic Offenders Act, 2018 (FEOA): <\/strong>This law was enacted to <strong>deter economic offenders from evading the process of Indian law<\/strong> by remaining outside the jurisdiction of Indian courts.\u00a0<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Conclusion<\/strong><\/h3>\n\n\n\n<ul class=\"wp-block-list\">\n<li>India has taken significant steps to combat money laundering through the Prevention of Money Laundering Act (PMLA), 2002, and the work of enforcement agencies such as the Enforcement Directorate.\n<ul class=\"wp-block-list\">\n<li>Despite these efforts, challenges remain, including complex financial structures, cross-border transactions, lengthy legal processes, and relatively low conviction rates.\u00a0<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>Strengthening investigation mechanisms, improving coordination among agencies, and enhancing judicial efficiency are crucial to addressing these gaps.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.thehindu.com\/news\/national\/karnataka\/bengaluru-ed-uncovers-35-million-crypto-otc-scam-digital-assets-worth-8700-usdt-seized\/article71248638.ece\" target=\"_blank\" rel=\"noopener\"><strong>TH<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p><strong> Context <\/strong><\/p>\n<li class=\"ms-5\"> The Directorate of Enforcement (ED) has launched a money-laundering investigation into an alleged $35 million cryptocurrency over-the-counter (OTC) trading scam. <\/li>\n<p><\/p>\n<p><strong> Money Laundering <\/strong><\/p>\n<li class=\"ms-5\"> Money laundering disguises financial assets while protecting the illegal activity that produced them.\u00a0 <\/li>\n<li class=\"ms-5\"> The prevention of money laundering has become an international effort that includes terrorist funding among its targets. <\/li>\n<p><a href=\" https:\/\/www.nextias.com\/ca\/current-affairs\/22-07-2026\/money-laundering-india \" class=\"btn btn-primary btn-sm float-end\">Read More<\/a><\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-79857","post","type-post","status-publish","format-standard","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/79857","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=79857"}],"version-history":[{"count":3,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/79857\/revisions"}],"predecessor-version":[{"id":79863,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/79857\/revisions\/79863"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=79857"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=79857"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=79857"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}