Beruflich Dokumente
Kultur Dokumente
Sukumar Nandi
1 2
A shell company is often a company created as a Poonam Gupta and Sanjeev Gupta, Estimates of the
front company to do business when required. Unreported Economy in India, Economic and
Generally this type of companies do no business and Political weekly, 17 ( 3), January 1982. This study
remain on paper, but they are used to cover many puts the figure slightly below 50 per cent in 1980
business operations. itself.
1
and as a result, many suspect money border trade that has no legal
transactions remain beyond the arms sanction) needs to be placed safely
of law. This aspect of inefficient legal and it is generally deposited in an
system is associated with systemic institution of business, or invested in
corruption in many developing expensive assets. The whole operation
countries. This sort of legal vacuum becomes an informal affair and thus,
creates a space for the growth of a remains beyond the scanning of law
culture in which money power draws enforcing institutions.
certain respect in the society and that
makes people believe in a type of Second, in the layering stage, the
system, where people think in terms agents try to separate illegally
of the following dictum: generated funds from the original
source and this is done by creating
“We live by the golden rules. People layer upon layer of transactions. The
who have the gold make the rules”3. latter take the form of movements of
money between different accounts,
Effective governance is a luxury many and/or between businesses through
less developed countries cannot afford buying and selling of assets on a
and the result is that rule of law does global basis. This goes on until the
not reach in all regions of countries original source of funds virtually
like Afghanistan, Mongolia, many becomes untraceable.
countries in Africa and also in some
regions of Eastern Europe. As a result, Third, upon completion of the layering
private money power is more powerful process the illegal funds are
than state power in those regions. introduced in the financial system in
Taking advantage of the vacuum of legal way as payments of services
effective governance interested and/or against transaction of
parties can pursue semi-political commodities. At this stage money
ambitions in the guise of some popular becomes legal and laundering is
issues and that is facilitated by money complete.
power. For this reason, it is said
sometimes: The three processes described above
can be explained through an example
“The invisible money power is working so that modus operandi of the whole
to enslave mankind. It financed mechanism becomes clear.
Communism, Fascism, Marxism,
Zionism and Socialism”4 In the golden crescent5
bordering Pakistan, Afghanistan and
Stages of Money Laundering Iran, illicit opium cultivation is an open
secret. The result is illegal drug
There are three primary stages in the dealing. The money generated
money laundering cycles: through sale of drugs is invested in a
(i) The placement stage posh hotel, frequented by travellers
(ii) The layering stage from all over the world. Now the
(iii) The integration stage proceeds from the drug deals are used
for payments related to this legal
First, during the placement stage, the business, along with other regular
hard money generated by the illicit trading incomes. The launderer now
activities (like drug smuggling, sale of
5
illegal arms and other type of cross- This mountainous region bordering three countries,
Pakistan, Afghanistan and Iran is a huge space that is
3
A quote by Buzzi Bavasi famous for illegal opium cultivation and known as
4
Quoted in American Mercury Magazine golden crescent in Asia.
2
opens up other supply companies to foreign capital and that is invested for
serve the business of the hotel. These local development. In lieu of that OFC
companies now issue invoices that the provides certain services like;
hotel settles through cheque
payments. The increased amount of (i) maintenance of secrecy
such transactions and movement of and confidentiality,
money along with this make a (ii) no exchange control,
smokescreen, so that the criminal (iii) absence of any tax
origin of money is effectively burden,
obscured. The whole process (iv) the facility of disguising
continues for the enrichment of the the ownership of
persons involved. corporate vehicles
through the use of
The Global Infrastructure: the nominee directors,
Offshore Centres (v) no reporting
requirements for
The large number of so-called tax- companies like annual
haven offshore centres gives enough reports,
facility to keep money in numbered (vi) no system of supervision
accounts, while keeping the true of companies such as
ownership of money anonymous to the annual general meetings.
outside world. The existence of
offshore finance centres (OFC) is a In essence, it is the absence of state
weak spot in the global financial (in the form of rules and regulations)
system, as the regulation of the that is the main attractions of money
financial transactions in OFC is seldom flowing to the offshore centres. The
effective because of its nature of above features are ideal for disguising
operations. the true origin of money and also true
ownership. As a result, OFC has
There are more than one hundred become favourite medium for money
offshore finance centres spread all laundering. The geography is not
over the world. Prominent among important, as same international bank
these are located in Hong Kong, in New York can maintain offshore
Thailand, Tahiti, Macao, Philippines, operations in a separate table, along
Singapore in Asia and Pacific, Andorra, with normal banking in the branch.
Cyprus, Dublin, Liechtenstein, London, Offshore banking services include the
Switzerland in Europe, Bahrain, Israel, borrowing of money from non-
Lebanon in Middle East, Bahamas, residents and lending to non-
Belize, Cayman Islands, St. Lucia, residents. This may assume the form
United States in Western Hemisphere. of lending money to corporates,
International banks in OFCs accept funded by liabilities to the offices of
deposits in multiple currencies and lending banks elsewhere. Some of
conduct banking operations on behalf these transactions are captured in the
of clients and they maintain secrecy. statistics published by Bank for
In fact, it is the secrecy and International Settlements (BIS). But
confidentiality that is their main significant volumes of funds are
product and these banks charge their managed by such institutions at the
clients for that. risk of investors, and such off-balance
sheet activity is not reported. The OFC
Many small countries encourage the in tax-haven zones are often the
growth of offshore financial services, conduit of capital flight and money
as these attract large volume of laundering.
3
observed that “There is not, at
Anti Money Laundering Measures present, any economic dues ex
machina that will allow the accurate
In 1998, Mr. Stanley Morris, Chairman measurement of money laundering
of the Financial Action Task Force world-wide, or even within most large
(FATF) of the Organization for nations. The basis for such estimations
Economic Cooperation and simply does not exist”.
Development (OECD) stated that “
the need to estimate the size of The Financial Action Task Force
money laundering and quantify its ( FATF) is active in its pursuit of anti
constituent parts has been a concern money laundering measures and it is
of the FATF6 since its initial report”. reflected in its Annual Report of 2008
The report identified the following in which the ministers under FATF
areas of legitimate demand for have given the mandate to the
quantitative measures of money organization to have four clear
laundering: objectives, which are:
6 7
The FATF comprises 34 members: 32 member These include stock brokers, share transfer agents,
jurisdictions and two regional organizations ( EU and trustee to a deed, merchant bankers, portfolio
Gulf Cooperation Council) representing most major managers, and any other intermediaries associated
financial centers of the world. Again, republic of with the securities markets and registered under
Korea and India became observers in 2006 and are section 12 of the Securities and Exchange Board of
working to become members. India Act, 1992.
4
transactions have been prescribed in it shows the enormous power of the
the Act. Such transactions include: money launderers.
The top ten origins of laundered
(i) All cash transactions of money in the world are (percentage of
the value of more than the total basis per annum): United
Rs. 10 lakhs in foreign States ( 46.3%), Italy (5.3%), Russia
currency ( 5.2%), China ( 4.6%), Germany
(ii) All series of cash ( 4.5%), France ( 4.4%), Romania
transactions integrally ( 4.1%), Canada ( 2.9%), U.K. ( 2.4%),
connected to each other, and Hong Kong ( 2.2%). One estimate
which have been valued puts the USA figure of laundered
below Rs. 10 lakhs in money per year as USD 1320 billion.
foreign currency, where This is a huge sum, and it shows the
such series of money power of the launderers.
transactions take place
within one month Money has no colour as the proverb
(iii) All cash transactions goes, and it is a fungible asset. This
where forged or quality is its beauty and present day
counterfeit currency money transfer technology (SWIFT
notes have been used as System) makes transfer of money
genuine, or where any across the globe very easy. But there
forgery of a valuable is a one-to-one relation between the
security or a document degree of effective control on the
has taken place, money laundering process and socio-
facilitating the economic welfare of the country.
transactions
(iv) All suspicious
transactions, whether or
not made in cash and
including, inter-alia,
credits or debits into from
any non-monetary
account such as demat
account, security account
maintained by the
registered intermediary.