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.
Approach · directive: “discuss / elaborate”
What it asks · Explain how new technologies and open borders help launderers, then set out the national and international measures against money laundering.
The question has 3 parts — answer each
- Discuss how emerging technologies and globalisation contribute to money laundering
- Elaborate the measures to tackle money laundering at the national level
- Elaborate the measures at the international level
Open with · Money laundering disguises the criminal origin of funds through placement, layering and integration, and technology and open borders make each stage faster and harder to trace.
Cover
- Technology: crypto assets and mixers, digital wallets and mule accounts, online gaming, shell companies formed online and dark-web trade give speed, anonymity and layering.
- Globalisation: open capital flows, offshore financial centres, correspondent banking and trade misinvoicing let funds cross jurisdictions faster than agencies can trace them.
- National law: the Prevention of Money-laundering Act, 2002 defines the offence, allows attachment of proceeds of crime and binds reporting entities; the Enforcement Directorate investigates.
- Detection: FIU-India (set up 2004) analyses suspicious and cash transaction reports; KYC and beneficial-ownership norms oblige banks and intermediaries to detect and report.
- Related laws: Benami Transactions (Prohibition) Amendment Act 2016 (in force November 2016), Black Money Act 2015 and Fugitive Economic Offenders Act 2018 close routes for hiding illicit wealth.
- International: FATF standards and peer reviews, including for virtual assets; Egmont Group of FIUs; UN conventions; treaties for legal assistance and tax-information exchange.
- Way forward: regulate virtual assets, use analytics and AI, share data across agencies in real time, and deepen global cooperation.
Close with · Since criminals adapt quickly, laws, technology and international cooperation must be updated together.
Add value (verified)
- Section 3 of the Prevention of Money-laundering Act, 2002 defines the offence broadly, covering every stage from concealment and possession to use and projecting proceeds of crime as untainted. The Prevention of Money-laundering Act, 2002, Section 3: Offence of money-laundering (Financial Intelligence Unit-India) ↗“any process or activity connected with the proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming it as untainted property shall be guilty of offence of money-laundering”
Question: UPSC's CS (Main) 2021, GS Paper III — paper ↗. Approach: Minimalist IAS, checked 30 Sept 2026 (how we verify) — UPSC publishes no model answers. ·
Model answer · 224 words (UPSC limit 150) · Minimalist IAS
Money laundering turns proceeds of crime into apparently clean assets through placement, layering and integration; technology and open borders speed up every stage and blur the trail.
How technology and globalisation help launderers
- Crypto assets and mixers move value outside banks; wallets, mule accounts and online gaming split sums into fast, small transfers that evade thresholds.
- Shell companies can be formed online across jurisdictions, hiding beneficial owners.
- Open capital flows, offshore centres, correspondent banking and trade misinvoicing move funds across borders faster than agencies can trace; uneven laws create havens.
National measures
- PMLA 2002: section 3 defines the offence broadly, from concealment to projecting proceeds as untainted; it allows attachment of proceeds, binds reporting entities and is enforced by the ED.
- FIU-India (2004) analyses suspicious and cash transaction reports; KYC and beneficial-ownership norms make banks and intermediaries detect and report.
- Supporting laws: Benami Transactions (Prohibition) Amendment Act 2016, Black Money Act 2015 and Fugitive Economic Offenders Act 2018.
- Regulate virtual assets, deploy analytics and AI for transaction monitoring, and share data across agencies in real time.
International measures
- FATF standards and mutual evaluations, now extended to virtual assets, with grey-listing as pressure; the Egmont Group for FIU-to-FIU intelligence exchange.
- UN conventions, mutual legal assistance treaties and tax-information exchange agreements.
Criminals adapt faster than statutes, so laws, technology and cross-border cooperation must be upgraded together.
Written by Minimalist IAS from facts checked at source (how we verify) — a little fuller than exam length, so every part of the question is covered; in the hall, keep the structure and trim the detail. UPSC publishes no model answers: compare your structure and coverage with this, then write your own.