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Approach to minimising Money Laundering & Financing of Terrorism Risks

Good day,

In November 2016, the PM of India announced the removal of Rs1000/- and Rs500/- from circulation and introduced Rs2000/- notes. The announcement was referred to as 'India’s 2016 Demonetisation'. In the last 100 years, very few countries have removed their high-value currencies from circulation. In most cases, the primary reason has been economics and not used as an anti-money laundering tool.

It caused the death of about 100 people, as they could not endure the pain of waiting in serpentine queues for their hard-earned money. Several hundred-thousand people lost their jobs in the informal sector. In most countries, cash continues to the preferred basis for business transactions in sectors like Construction and in the Micro Small & Medium enterprises. This is unlikely to change in the foreseeable future although there is a lot of hype on Digital initiatives. The reason is convenience, business practice and geographical i.e. a nuanced, domestic CASH eco-system.

In the context of democratic countries ranking poorly in the Transparency International's index, the CORE factors (risk based approach) that can minimise money laundering are (a) Election Funding & Spending Limits (b) De-criminalisation of candidates contesting elections (c) Trade based laundering and (d) lack of accountability, particularly of gateway keepers i.e. accountants, auditors, lawyers and registrars.

The Indian Parliament constituted a team to investigate and asses the 'Demonetisation'. The link provides an update on the report.

www.timesnownews.com/india/article/demonetisation-report-accessed-eight-reasons-why-bjp-wants-demo-report-buried-narendra-modi-congress/276471

Money Laundering and Financing of Terrorism are intertwined evils that pose a challenge to financial stability, income equality and global peace. Demonetisation is not a tool for fighting corruption and minimising ML-FT risks. 

 

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