Q. Discuss how emerging technologies and globalisation contribute to money laundering. Elaborate measures to tackle the problem of money laundering both at national and international levels.

Model Answer: 

Money laundering, the process of legitimizing illicit funds, has grown exponentially due to the complex convergence of globalization and emerging technologies.

1. Role of Emerging Tech & Globalisation

• Anonymity & Obfuscation: Cryptocurrencies and crypto-mixers (e.g., Tornado Cash) bypass traditional banking, hiding the origin of funds.
• Borderless Finance: Instant global wire transfers facilitate rapid “layering,” complicating multi-jurisdictional law enforcement tracking.
• Offshore Havens: Globalization enables complex shell company networks in tax havens to hide beneficial ownership (e.g., Panama/Pandora Papers).
• Dark Web & Cybercrime: Provides anonymous marketplaces for illicit trade (drugs, ransomware), settling payments via untraceable peer-to-peer virtual assets.

2. Countermeasures: National & International Levels

National Measures:

• Statutory Mandate: The Prevention of Money Laundering Act (PMLA), 2002 enables strict asset confiscation by the Enforcement Directorate (ED).
• Financial Intelligence: FIU-IND mandates banks and exchanges to flag Suspicious Transaction Reports (STRs).
• Cyber Forensics: The Indian Cyber Crime Coordination Centre (I4C) tracks dark-web financial footprints.

International Measures:

• FATF Guidelines: Mandates the ‘Travel Rule’ for Virtual Asset Service Providers (VASPs) and uses Grey/Black lists for non-compliant nations.
• Global Treaties: The UN Convention against Transnational Organized Crime (Palermo Convention) standardizes cross-border cooperation.
• Data Exchange: The Egmont Group facilitates real-time intelligence sharing among 170+ national FIUs.

Combating high-tech money laundering requires standardizing global legal frameworks and deploying AI-driven regulatory technology (RegTech) for proactive, real-time financial surveillance.