We have been listening the term money laundering since many years. It is a process to convert black money into white money and to hide the source of illegal earning. In recent years many big faces are accused of this charge. Money laundering a complete fake process where fake company, documents and even transactions are shown to the Government in order to save tax. Recent news is related to Former Home Minister P. Chidambaram who has been accused of INX media corruption case. CBI has arrested P. Chidambaram on Wednesday night.
What are allegations on P. Chidambaram ?
CBI has filed FIR against INX Media Group on 15 May 2017. It was allegation that INX Media Group was facing problem in clearance of Foreign Investment by Foreign Investment Promotion Board (FIPB). When the company was allowed to invest in 2007, Chidambaram was Finance Minister. The Investigating Agencies named Chidambaram when the promoter of INX Media Indrani Mukharjee and her husband Peter Mukharjee were questioned by Enforcement Directorate.
Enforcement Directorate (ED) said: Indrani Mukharjee has said that P. Chidambaram had put condition for FIPB's clearance. The condition was, they have to favour Chidambaram's son Karti Chidambaram in his Foreign Investment.
According to media report: P. Chidambaram and his son had got 305 Crore Rupees as commission by INX Media promoters.
The Enforcement Directorate had loged the case of Money Laundering in 2018.
CBI is also investigating the deal of 3500 crore Rupees between Aircle and Maxis. In 2006, Malaysian company Maxis has bought 100% shares of Aircel. In this case, the clearance of merging of the two companies were questioned. It is because at that time Finance Minister could give clearance of Foreign Investment only upto 600 Crore Rupees. The meeting of Cabinet Committee related to Finance was required for the clearance of more than 600 Crore Rupees of Foreign Investment.
What is Money Laundering ?
Money Laundering word was originated in America by local Mafia Groups. These groups used to collect money forcefully by Gambling etc. In 1980, Money Laundering was matter of serious concern in America. Through money laundering black money is invested in a way that Investigating Agencies could not find the real source of income. This way black money is converted into white money. The Government has no record of this money and hence taxes are not paid by the Launderers. In money laundering, fake companies, document and transactions are shown.
There are 3 stages of Money Laundering:
1) Placement
2) Layering
3) Consolidation
Placement: It means money comes into market. In this process the Launderer invest money in Banks or other Formal and Informal sectors.
Layering: It is the process of hiding source of money and tax. In this, Launderers shows some difference in his transactions and invest in Bonds, Stocks and Foreign Banks.
Consolidation: In this process, the investment in various things at different places comes back to the Launderer in form of white money.
PNB Scam, Sandesara Brother's Scam, Commonwealth Games Scam, 2G Scam, these are few examples of money laundering.
Prevention of Money Laundering Act, 2002.
When Stock market scam was done, Harshad Mehta case comes into picture. That time Kirit Somaiya was Member of Parliament from Mumbai. He moved resolution that Money Laundering is very serious issue. Then the Prevention of Money Laundering Act, 2002 was passed by Atal Ji's Government.
Under the Prevention of Money Laundering Act, Launderers can be punished with 3 to 7 years of imprisonment with fine. The property can be attatched as well. The power of investigation is given to Enforcement Directorate (ED). For the trials, Special Courts has been set up. The Prevention of Money Laundering Act has been amended 3 times in 2005, 2009 and 2012.
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