essays on money laundering

Essay about Money Laundering

In a globalised world where technology allows money to be moved anywhere within seconds, fighting money laundering is more important than ever. Money laundering is an international global threat, and the social and economic consequences of it are wide-reaching. The National Crime Agency (NCA) estimate that annually the amount impacting the UK is as high as hundreds of billions of pounds (NCA, n.d.). The essay will firstly critically analyse the phenomenon that is money laundering and its impact. Efforts by governments to address money laundering have been ongoing for years, with several international initiatives introduced. One of theses initiatives is asset confiscation. Asset confiscation has been recognised as an important aspect of a successful anti-money laundering regime, mainly because it deprives criminals of their financial assets, restricting their ability to engage in more illegal and dangerous activity (FATF, 2012). The essay will discuss this initiative and its effectiveness. Despite the seriousness of money laundering and the importance of asset confiscation, Europol reports that only about one percent of profits of organised crime groups are confiscated (European Commission, 2020). There are a multitude of reasons for this, which stem from money laundering being difficult to detect and that the initiative of asset confiscation has its limitations, a significant one being that of cross-border challenges. The essay will analyse these cross-border challenges from the perspective of asset confiscation. This is an important challenge to discuss as every piece of directive and legislation relating to asset confiscation on its own has very little impact as the illegal assets involved with money laundering often cross borders (Segarajasingham, 2018). The essay will conclude that confiscating assets is an effective means of preventing money laundering, however, cross-border challenges mean that its success is ultimately hindered. 

Money Laundering 

The term ‘money laundering’ was first used in 1973 during the Watergate Scandal, meaning that there is no original legal definition, but instead an informal interpretation describing money laundering as the process of transforming illegal assets into legal ones. Since then, Article 6(1) of the UN 2000 Convention Against Transnational Organised Crime has provided a more legally intricate definition of money laundering. In summary it states that money laundering is the participation and knowledge of transferring assets obtained through the proceeds of crime, for the purpose of concealing the illicit origin of such assets (UNCATOC, 2000). 

The process of money laundering is usually perceived as being divided into three stages: placement, layering and integration. At the first placement stage, illegal assets are infiltrated into the financial system, by using for example a legal bank. Next, in the layering stage criminals attempt to conceal the source of the illegal assets by moving around the money through a large number of transactions. In the final integration stage, the transferred assets are infiltrated into the economy through financial investments (Schneider & Windischbauer, 2008). It is important to note, however, that this three-stage model is only a useful guide as it is not always applicable and has its limitations. These limitations, however, will not be discussed in this essay.

As already mentioned, the scale of money laundering is wide-spread and has potentially devastating economic, security and social consequences. The illicit assets involved in money laundering provide “the fuel for drug dealers, terrorists, illegal arms dealers, corrupt public officials and others to operate and expand their criminal enterprises” (McDowell, 2001, pp. 6). Therefore, what some perceive to be a ‘victimless’ crime (Stessens, 2000), only impacting large corporations, is actually the driving force behind other very serious and even life-threatening offenses (Alexander, 2007).

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Money Laundering: Most Effective Combat Strategies Essay

Strategies used to combat money laundering, effectiveness of the strategies applied to combat money laundering, the most effective strategies of money laundering control.

Money laundering refers to acts, whereby, criminals mask the nature of their illegal activities, sources of their finances, and proceeds of their activities. Money laundering corrupts the integrity of the whole financial system of a country (MacQueen, 1993). Participants of money laundering activities strive to establish legitimate reasons to conduct their illegal businesses.

Criminals, who deal in money laundering, conduct their transactions in least suspicious ways to hide from authorities such as, the government and business administration bodies that control money laundering. The practice of money laundering is widespread all over the globe. It is rampant in countries with loose anti laundering programs and in countries that have inefficient mechanism to detect money laundering.

The practice of money laundering affects the economy and security of a country (MacQueen, 1993). There have been increases in implications brought by money laundering, internationally. This calls immediate intervention from the mandated bodies, in the relevant countries.

The government of United States of America approximates losses 60 billion U.S dollars, annually. One of the main routes adopted for money laundering is through sale of drugs. Since sale and consumption of drugs is illegal in most of the countries, different innovative ideas are used to reach the prospective customers.

The same applies to ways adopted by money launderers. There are various techniques that are adopted (Module 8, slide 3). The money from the sales is transferred illegally. It is estimated that the drug trade is worth US$322 billion annually (Module 6, slide 2). Money laundering should be controlled; otherwise, economic progress may not be realized as quickly as projected.

The increased concerns about the adverse effects of money laundering led to precautionary and combative measures to be developed, in various countries. Countries have directed their efforts to curb money laundering to control the downwards projections of their countries’ economies. Countries are also aware of the security challenges posed by money laundering. As a result, countries have joined regional blocks such as the E.U to enjoy platforms laid down to control money laundering.

Nations hope to do away with money laundering by applying their own strategies and those from regional blocks (MacQueen, 1993). Canada adopted a unique strategy to curb the use of drugs and indirectly minimize money laundering. The Canadian government decriminalized the use of drugs but kept it illegal (Module 6, slide 29). So gradually the use of drugs is expected to decrease. This will definitely have a positive impact on the financial figures of the country.

Another method that the Canadian government adopted to curb money laundering was to open dummy exchange office that allowed drug traffickers to deposit money in order to legalize it. Many drug traffickers were attracted to deposit huge amounts of illegal money. Almost US$165 million were collected through this (Module 7, slide 19). According to some scholars, the best way to demoralize money launderers is to freeze their valuable assets (Module 9, slide 7).

Several countries such as Canada have adopted legislative programs that have initiated strategies to combat money laundering. These programs aim to tackle money laundering issues at the basics. The legislative programs established have aimed at, evaluating and monitoring suspected illegal accrual of wealth.

The programs have provided a ground to report doubtful money or assets, held by various individuals. Changing times and technologies have made it possible to conceal of vital information on illicit wealth in a way that cannot be traced easily. Most countries have high levels of corrupt legislative officers, across the globe. Corrupts individuals manipulates money laundering corrupt officers through bribes, who allows money laundering activities to proceed.

The US government has set up a legislative control act (The Money Laundering Control Act), which encourage suspected people to report and justify the acquisition of their wealth, or to face charges amounting up to 3000 U.S dollars. On the other hand, Canada has established a national initiative to tackle money laundering cases.

The initiative has strategized ways to spot and limit the financing of terrorist activities in the country. The contents of the strategy: include provision of a background for in depth investigation of money laundering cases, and ruthless prosecution of money laundering offences (Stephen, 2004).

The United Nations (UN) has implemented anti terrorism measures. The Security Council, a wing of the United Nations, commissioned a set of sanctions against persons associated with money laundering. The sanctions intend to freeze all assets these individuals have, and also ban them to travel to other countries. The United Nations together with bodies set up by different countries have stepped up their efforts, and realized considerable results in curbing money laundering cases.

The Croatian government reported a 40% decrease in losses that arose from money laundering. Following this incidence, the government has combined efforts with the U.N to trace terrorism financing roots. This strategy has covered a considerable ground and has reduced money laundering activities by 12%, in 2012. The strategy has also realized massive gains with regard to the high number of money laundering cases reported, in Croatia (David, 2009).

Supervisory authorities have played the most significant role to curb money laundering. The inclusion of financial institutions such as, banks and insurance supervisors in the monitoring of monetary transactions have helped, countries, significantly to get the sources and destinations of finances that have been involved in money laundering activities (Gilmore, 1999).

Financial institutions supervisors have helped to trace the locations of the participants of money laundering, and bring them for prosecution. Financial institution strategy has complemented the other strategies to curb money laundering. Financial institutions help to detect terrorists financing agents, and provide data for the legislative bodies to take actions.

Financial institutions strategy is the most effective way of controlling money laundering, and thus demands undivided attention. However, the effectiveness of this strategy is not guaranteed if authorities do not take actions. The strategy is also subject to manipulation by influential participants in money laundering. Money laundering is an illegal activity that engages in transactions that revolve around several countries.

This fact calls for cooperation among countries. Cooperation should facilitate the exchange of information that is useful in anti money laundering campaign (Gilmore, 1999). In addition, established bodies such as the United Nations should provide a common ground to promote cooperation among countries.

Combined efforts provided by other bodies and treaties such as, the Mutual Legal Assistance Treaty, have helped significantly to step up anti laundering campaigns, in various member countries. Other countries are undertaking zonal participation, in curbing the menace, as a result of the alarming cases, and more awareness created by U.N conventions.

Therefore, governments should step up their fight against money laundering. They should enhance cooperation among financial institutions, in order for them to access the necessary information from suspected money laundering individuals, and thus control money laundering activities to the minimum level possible.

David, C., & Sharman, J. (2009). Corruption and Money Laundering: A Symbiotic Relationship. Palgrave: Macmillan.

Gilmore, W. C. (1999). Dirty Money: The Evolution of Money Laundering Counter-measures . Strasbourg: Council of Europe Pub.

MacQueen, H. L., & David Hume Institute. (1993). Money Laundering. Edinburgh: Edinburgh University Press.

Module 6. (n.d.). The Drug Trade – Study Materials (Slides 2 & 29). Retrieved from: file:///C:/Users/admin/Downloads/eConcordia%20-%20Governance%20and%20Organized%20Crime%20-%20Module%206-%20The%20Drug%20Trade%20(Print%20Version).html

Module 7. (n.d.). Law Enforcement Strategies – Study Materials (Slide 19). Retrieved from: file:///C:/Users/admin/Downloads/eConcordia%20-%20Governance%20and%20Organized%20Crime%20-%20Module%207-%20Law%20Enforcement%20Strategies%20(Print%20Version).html

Module 8. (n.d.). Money Laundering – Study Materials (Slide 3). Retrieved from: file:///C:/Users/admin/Downloads/eConcordia%20-%20Governance%20and%20Organized%20Crime%20-%20Module%208-%20Money%20Laundering%20(Print%20Version).html

Module 9. (n.d.). Combating Money Laundering – Study Materials (Slide 7) . Retrieved from: file:///C:/Users/admin/Downloads/eConcordia%20-%20Governance%20and%20Organized%20Crime%20-%20Module%209%253a%20Combating%20Money%20Laundering%20(Print%20Version).html

Stephen, S. (2004). Money Laundering in Canada: An Analysis of RCMP Cases. Nathanson Centre for the Study of Organized Crime and Corruption. New York: York University.

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What Is Money Laundering?

• How It Works

Types of Transactions

Electronic money laundering, the bottom line.

• Financial Crime & Fraud
• Definitions M - Z

The prevention of money laundering has become an international effort

James Chen, CMT is an expert trader, investment adviser, and global market strategist.

Money laundering is an illegal activity that makes large amounts of money generated by criminal activity, such as drug trafficking or terrorist funding, appear to have come from a legitimate source. The money from the criminal activity is considered dirty, and the process “launders” it to look clean. Financial institutions employ anti-money laundering (AML) policies to detect and prevent this activity.

Key Takeaways

• Money laundering disguises financial assets without detecting the illegal activity that produced them. 
• Online banking and cryptocurrencies have made it easier for criminals to transfer and withdraw money without detection.
• The prevention of money laundering has become an international effort that includes terrorist funding among its targets.
• The financial industry also has its own set of strict anti-money laundering (AML) measures in place.

Investopedia / Julie Bang

How Money Laundering Works

Money laundering is essential for criminal organizations that use illegally obtained money. Criminals deposit money in legitimate financial institutions to appear as if it comes from legitimate sources. Laundering money typically involves three steps although some stages may be combined or repeated.

• Placement: Injects the “dirty money” into the legitimate financial system.
• Layering: Conceals the source of the money through a series of transactions and bookkeeping tricks.
• Integration: Laundered money is disbursed from the legitimate account.

The Bank Secrecy Act (BSA) requires financial institutions to keep records of cash purchases of negotiable instruments, file reports of cash transactions exceeding $10,000, and report suspicious activity that might signal money laundering.

• Structuring or Smurfing : Large allotments of illegally obtained cash are divided into multiple small deposits and spread over many different accounts
• “Mules” or cash smugglers: Cash is smuggled across borders and deposited into foreign accounts
• Investing in commodities: Using gems and gold that can be moved easily to other jurisdictions
• Buying and Selling: Using cash for quick turnaround investment in assets such as real estate, cars, and boats
• Gambling: Using casino transactions to launder money
• Shell companies : Establishing inactive companies or corporations that exist on paper only

The rise of online banking institutions, anonymous online payment services, and peer-to-peer (P2P) transfers with mobile phones have made detecting the illegal transfer of money increasingly difficult. Proxy servers and anonymous software make the third component of money laundering, integration, difficult to detect as money can be transferred or withdrawn with little or no trace of an Internet protocol (IP) address.

Money can be laundered through online auctions and sales, gambling websites, and virtual gaming sites, where ill-gotten money is converted into gaming currency, then back into real, usable, and untraceable “clean” money.

Money laundering may involve cryptocurrencies , such as Bitcoin . While not completely anonymous, they can be used in blackmail schemes, the drug trade, and other criminal activities due to their relative anonymity compared with fiat currency .

AML laws have been slow to catch up to cybercrime since most laws are still based on detecting dirty money as it passes through traditional banking institutions and channels.

According to the United Nations Office on Drugs and Crime, global money-laundering transactions account for roughly $800 billion to $2 trillion annually, or 2% to 5% of global gross domestic product (GDP) . In 1989, the Group of Seven (G-7) formed an international committee called the Financial Action Task Force (FATF) to fight money laundering on an international scale. In the early 2000s, its purview was expanded to include terrorist activity.

The United States passed the Bank Secrecy Act in 1970, requiring financial institutions to report cash transactions above $10,000 or unusual activity on a suspicious activity report (SAR) to the Department of the Treasury . This information is used by the Financial Crimes Enforcement Network (FinCEN) to be shared with domestic criminal investigators, international bodies, or foreign financial intelligence units.

Money laundering was deemed illegal in the United States in 1986, with the passage of the Money Laundering Control Act. After Sept. 11, 2001, the USA Patriot Act expanded money laundering efforts. The Association of Certified Anti-Money Laundering Specialists (ACAMS) offers a professional designation known as a Certified Anti-Money Laundering Specialist (CAMS) . These individuals work as brokerage compliance managers, Bank Secrecy Act officers, financial intelligence unit managers, surveillance analysts, and financial crimes investigative analysts.

What Is an Example of Money Laundering?

Cash earned illegally from selling drugs may be laundered through highly cash-intensive businesses such as a laundromat or restaurant where the illegal cash is mingled with business cash before deposit. These types of businesses are often referred to as “fronts.”

What Are Signs of Money Laundering?

Money laundering red flags include suspicious or secretive behavior by an individual around money matters, making large transactions with cash , owning a company that seems to serve no real purpose, conducting overly complex transactions, or making several transactions just under the reporting threshold.

How Is Real Estate Used for Money Laundering?

Criminals use real estate transactions, including undervaluation or overvaluation of properties, buying and selling properties rapidly, using third parties or companies that distance the transaction from the criminal source of funds, and private sales.

How Are Cryptocurrencies Used in Money Laundering?

The U.S. Financial Crimes Enforcement Network (FinCEN) noted in a June 2021 report that convertible virtual currencies (CVCs) , or cryptocurrencies, are a currency of choice in various online illicit activities. CVCs can layer transactions and obfuscate the origin of money derived from criminal activity. Criminals use several money-laundering techniques involving cryptocurrencies, including “mixers” and “tumblers” that break the connection between an address or crypto “wallet” sending cryptocurrency and the address receiving it.

Money laundering disguises illegally obtained financial assets. Global governments and financial institutions have anti-money laundering measures in place. Online activity and digital assets have added to money laundering transactions.

United Nations Office on Drugs and Crime. “ Money Laundering .”

Office of the Comptroller of the Currency. “ Bank Secrecy Act (BSA) .”

Financial Crimes Enforcement Network. “ History of Anti-Money Laundering Laws .”

Financial Action Task Force. “ History of the FATF .”

Congressional Research Service. " U.S. Efforts to Combat Money Laundering, Terrorist Financing, and Other Illicit Financial Threats: An Overview ." Page 2.

Association of Certified Anti-Money Laundering Specialists. “ Start Your CAMS Journey Today: CAMS Frequently Asked Questions ." Select "The CAMS Certification."

Financial Transactions and Reports Analysis Centre of Canada. “ Operational Brief: Indicators of Money Laundering in Financial Transactions Related to Real Estate .”

Financial Crimes Enforcement Network. “ Anti-Money Laundering and Countering the Financing of Terrorism National Priorities .” Page 5.

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Money laundering is defined as “washing” proceeds to disguise their true source. The source of these proceeds can be from either legal or illegal activities. (Manning, 2005). Criminals use money laundering as a way to try and legitimise the money they have earned from criminal activities. There are laws to try and prevent money laundering from occurring. The Proceeds of Crime Act 2002 (POCA) is an act under the UK law which states and identifies various regulations which constitute to money laundering. POCA has multiple sections regarding money laundering offences; Sections 327 through to 331 and 333. The various offences outlined in POCA are as – 1. Concealing etc 2. Arrangements 3. Acquisition, use and possession 4. Failure to disclose – regulated sector 5. Failure to disclose – nominated officers in the regulated sector 6. Tipping off For the above offences, a prosecutor must establish a offence under the particular clause. “For example, the prosecutor would need to establish that a person entered into or became concerned in an arrangement which he knew or suspected would make it easier for another person to acquire, retain, use or control criminal property and that the person concerned also knew or suspected that the property constituted or represented benefit from criminal conduct.” (Legislation.gov.uk, 2019) Professionals should have safeguards in place to try and prevent money laundering. One type of safeguard is responsibly completing customer due diligence (CDD). The rules on CDD are “intended to ensure that accountants are able to remain in control of the engagement and that their offices are not used for criminal purposes.” (Accaglobal.com, 2019) Essentially, CDD is the steps an accountant must take to verify the identity of their client using trustworthy documents. If the documents are found to be fraudulent then the client must be further investigated by relevant parties. There is a legal requirement to complete a suspicious activity report (SAR) if there is any suspicion of criminal behaviour. There are three requirements to be met before completing a SAR. The first being, reasonable grounds of suspicion for money laundering. Following that, if the suspicious activity came from your workplace. Finally, if you can identify the person/people who may be involved in the money laundering. This SAR can be completed by any individual that is relating to the offence, this is then sent to the money laundering reporting officer (MLRO) which is then submitted to the national crime agency. Money Laundering Regulations 2017 (MLR), have been introduced as another way to combat money laundering. In MLR 2017, sections 19, 20 and 21b there are guidelines a professional must follow regarding policies, controls and procedures. The regulations in MLR require training to be completed so that a professional can spot irregularities which stops them from becoming involved in money laundering activities. The possibility of pursing a negligent claim are based on four elements which must be identified in order to have a justified case. They are; duty of care, breach of duty, damage and causation. Duty of care is a legal obligation to recognise a relationship between two parties, where one individual has an obligation to take action in a particular manner towards the other. As per the scenario, duty of care was owed by the local sports centre. The local sports centre was clearly aware of the water damages and yet still allowed members to access the indoor sports hall. The second element of negligence is breach of duty, where a person/ entity does not fulfil their duty by providing reasonable care in order to complete the duty required. The local sports centre was at breach of duty as they were unable to rectify the issue, hence, resulting in Mikel’s injury. The third element of negligence is causation; this occurs when there has been a breach of duty for the care of individual(s) resulting in an injury where the defendant’s actions resulted in the plaintiff injury. From the scenario, Mikel was injured as a result of the sports centres disregard towards the water leak. The final element of negligence is damages; this is regarding an injury where legally monetary compensation can be claimed. In the case for Mikel, the damages resulted in Mikel having multiple fractures and admitting him to hospital where plates were inserted to support the fractures thus, Mikel became immobilised for a period of time. Although, whilst playing in indoors it is advisable to wear flat soled trainers so partially Mikel is at fault. The four elements of negligence have been identified and discussed and from this evidence, Mikel is able to make a negligence claim. As there is a case to be made for negligence, a forensic accountant (FA) should be brought in to establish a justifiable amount of compensation, which is not always monetary, equal to the damages sustained by Mikel. There are multiple factors which the forensic accountant uses to come to a conclusion. The forensic accountant should consider – 1. The nature of the damage 2. The extent of damage 3. Any resulting consequences 4. Medical reports 5. Any precedents The FA will take a look at any medical reports and find out further information about Mikel to see his economic stance, his employment status and how the injury will affect his lifestyle. Other factors will also be considered into the settlement, the fact that Mikel didn’t wear the correct shoes will have a negative impact on the case and as a result will receive less than he would’ve using appropriate attire. The FA would also look at the history of Mikel and see if he has any history of claims to prove the legitimacy of this case. After making a report on the scenario the information will be provided to relevant parties such as a solicitor, the defendant, or the claimant.

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Essay Samples on Money Laundering

Money laundering in the united states of america and tools to fight it.

Bank Secrecy Act According to the United States’ first anti-money laundering and counter-terrorism financing (AML/CFT) act – the Bank Secrecy Act (BSA), US financial institutions/banks are obliged to cooperate with the US government in order to fight against money laundering and terrorist financing. In line...

• American Government
• Money Laundering
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Concerns Around Money Laundering and Terrorism Financation

Today’s modern society, together with high achievements in all fields of human life, is more seriously threatened by crime that is constantly on the upswing. Special emphasis shall be placed on the organized crime that is socially negative phenomenon, possible to infiltrate in the socio-economic...

• Social Problems

The Connection Between Money Laundering and Corruption

Economic crimes have always affected both individuals and the society in disastrous and overwhelmingly manner in that they can lead to economic instability or the total decline of a country’s economy (Sibudubudu, 2003). “Money laundering is the process by which one conceals the existence, illegal...

Money Laundering and Financing of Terrorism in Pakistan

Abstract This article analyzes money laundering Furthermore financing from claiming terrorism with Pakistan’s viewpoint. Advancement of Money laundering alongside those three steps included in this procedure need been talked about here Here an assessment of the Different legislation's managing specifically alternately by implication for money...

Relations Between Money Laundering and Globalization

Introduction The economic problems have taken a global dimension after the globalization. It has also increased the supply chain of products across the borders. Cross-border transaction of black money and money laundering are serious economic crimes, and it causes substantial impacts on the economic development...

• Globalization

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1. Money Laundering in the United States of America and Tools to Fight It

2. Concerns Around Money Laundering and Terrorism Financation

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5. Relations Between Money Laundering and Globalization

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Home — Essay Samples — Law, Crime & Punishment — Money Laundering — What Do We Know About Money Laundering

What Do We Know About Money Laundering

• Categories: Money Laundering Organized Crime

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Published: May 19, 2020

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Why launder money?

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Prevention of Money Laundering Act (PMLA): Importance and Concerns

Syllabus: Internal Security

  Context : The article discusses the Prevention of Money Laundering Act (PMLA), which was initially aimed at combating the laundering of drug money but has expanded to include various unrelated offences over time.

Recently, the P unjab and Haryana High Court clarified that courts can release an accused of money laundering from police custody without fulfilling the conditions mandated by the Prevention of Money Laundering Act (PMLA), 2002

What is Money Laundering ?

Money laundering is a process used to hide the origins of illegally obtained money , making it appear legitimate. It involves three stages:

• Placement , where illicit funds enter the financial system
• Layering , where funds are moved through complex transactions to conceal their source
• Integration , where laundered funds are reintroduced as legitimate.

Methods include structuring, trade-based laundering, shell companies, and real estate transactions.

About PMLA :

Need for Prevention of Money Laundering Act (PMLA):

• Global Urgency: Prompted by global concerns over drug trafficking, the PMLA was enacted to prevent the laundering of proceeds from drug crimes, in line with UN conventions.
• Establishment of FATF : Following the establishment of the Financial Action Task Force (FATF) in 1989, measures like the PMLA were adopted to combat money laundering worldwide.
• UNGA Resolution: A 1990 resolution by the UN General Assembly emphasized the need for legislation to prevent drug money laundering, prompting India to enact the PMLA.
• Narasimham Committee Recommendations : Recommendations from the Narasimham Committee highlighted the necessity of addressing money laundering within India’s financial system, contributing to the formulation of the PMLA.
• Adherence to International Standards: The PMLA aligns with international standards and recommendations, ensuring India’s compliance with global efforts to combat money laundering.
• Legislative Authority and Scope : Enacted under Article 253 of the Constitution (it empowers the government to make laws for implementing the international conventions), the PMLA enables India to remain in alignment with world standards on Money Laundering.

Amendment to PMLA: Recently in 2023, the Finance Ministry amended the Prevention of Money Laundering Act (PMLA) and rules in line with the recommendations of the FATF.

Recent amendments made to the Prevention of Money Laundering Act (PMLA):

• Defines PEPs ( Politically Exposed Persons): Individuals who have been entrusted with prominent public functions by a foreign country, thereby bringing Indian legal uniformity in line with FATF norms
• New rules mandate crypto exchanges and intermediaries dealing in virtual assets to maintain the KYCs of their clients and report suspicious transactions to financial intelligence units.
• Due diligence documentation requirements : It has now been extended. It now includes the submission of details such as names of persons holding senior management positions, names of partners, etc.
• The term ‘beneficial owner’ refers to those with the entitlement of more than 25% of shares or capital or profit of the company, which has now been reduced to 10%.
• NPOs : Reporting entities are now required to register details of the client if it’s a non-profit organization (NPO) on the DARPAN portal of NITI Aayog.
• Clarification on Proceeds of Crime : Proceeds of Crime now encompass not only property derived from scheduled offences but also from any criminal activity related or similar to the scheduled offence.
• Redefined Money Laundering : Previously dependent on a predicate or scheduled offence, money laundering is now treated as a distinct standalone crime through an amendment.

Crucial Role Played by PMLA:

Challenges with PMLA Enforcement:

• Definition of “Proceeds of Crime”: Some argue it’s overly broad, risking the inclusion of lawful transactions.
• Inclusion of Non-Drug Offences : PMLA encompasses offences beyond its original focus, diluting its purpose.
• The burden of Proof on Accused : Critics find the burden of proof unreasonably high, potentially impacting fair trials.
• Concerns of Overreach : E.g., Opposition political parties have alleged misuse of PMLA by ED to arrest party authorities including the sitting CM of Delhi
• However, in 2022, the Court upheld the validity of key provisions empowering the Enforcement Directorate (ED) to arrest, conduct searches, seizures, and attach proceeds of crime.
• Lack of Written Communication for Arrest : Arrests without written communication violate constitutional rights. Challenges in PMLA Enforcement:
• Complex Legal Procedures : Legal intricacies can lead to delays and inefficiencies in prosecution.
• Inadequate Training and Resources : Enforcement agencies may lack the necessary resources for effective implementation.

Reforming PMLA, 2002: Key Suggestions

• Parliamentary Committees: Recommended periodic reviews and amendments to the PMLA to address emerging challenges and ensure its relevance and effectiveness.
• Refinement of “Proceeds of Crime” Definition : Define “Proceeds of Crime” precisely to avoid ambiguity.
• Reassessment of Burden of Proof : Evaluate the burden of proof, ensuring fairness and constitutional rights.
• Safeguards Against Officer Overreach : Establish oversight to monitor law enforcement actions.
• Review of Stringent Bail Conditions : Streamline bail procedures without compromising investigations.
• Periodic Review and Amendment: Establish a mechanism for periodic review and amendment of PMLA.
• Enhanced Independence and Transparency of ED : Improve reporting and disclosure of ED activities.
• Public Awareness and Education : Conduct campaigns to educate the public on PMLA’s purpose and procedures.
• Consultative Approach: Engage in open dialogues to address concerns and gather diverse perspectives.

Conclusion:

The PMLA serves as a critical tool in India’s arsenal against money laundering. However, to fully leverage its potential, addressing the challenges in its implementation is essential . By strengthening the framework and execution of the PMLA , India can more effectively combat the complex and evolving nature of money laundering.

Insta Links:

• EDITORIAL ANALYSIS: Questionable searches under the Money Laundering Act

Mains Link:

Discuss how emerging technologies and globalization contribute to money laundering. Elaborate measures to tackle the problem of money laundering both at national and international levels. (UPSC 2021) 

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Regulating Opioid Prescriptions

Pain management is an inexact science; there is plenty of blame to go around for the abuse of such drugs.

To the Editor:

Re “ The D.E.A. Should Get Out of Public Health ,” by Shravani Durbhakula (Opinion guest essay, March 25):

The chilling effect on the legitimate prescribing and dispensing of opioid medications provoked by the Drug Enforcement Administration’s actions is having devastating real-world consequences among people living with chronic pain.

Although opioid therapy is not a panacea for pain management, which often necessitates a complex approach, certain patients undoubtedly benefit from these medications for long-term pain relief. People living with severely disabling pain conditions can participate in life’s activities if their opioid therapy is properly managed.

The D.EA., serving in a policing capacity, is not helping our country deal appropriately with the concerning drug overdose crisis. Public health evidence could not be clearer: The significant decline in opioid prescribing has not correlated with a significant decline in drug overdoses. Cutting the medical supply of opioids is not addressing overdoses and risks the health and lives of people who need access to essential medications.

Regulation of health-related activities to protect the public health of Americans must be guided by experts on those topics, not law enforcement agents.

Juan M. Hincapie-Castillo Pittsboro, N.C. The writer is a pharmacist and an assistant professor in the department of epidemiology of the Gillings School of Global Public Health at the University of North Carolina at Chapel Hill, and the board president of the National Pain Advocacy Center, a nonprofit that receives no industry funds.

Dr. Shravani Durbhakula’s critique of the Drug Enforcement Administration is misguided and unjustified.

It is worth noting that the opioid epidemic was started in the mid-1990s by OxyContin, a potent analgesic agent approved by the U.S. Food and Drug Administration, promoted by Purdue Pharma, and overprescribed by clinicians. Overprescription and overconsumption of opioid analgesics continued rising until 2010, when the D.E.A. began to crack down on “pill mills” run by physicians.

Since 1995, hundreds of physicians have been criminally prosecuted for opioid-related offenses, with drug trafficking, fraud, money laundering and manslaughter accounting for the majority of the convictions.

On average, Americans consume about 20 times the amount of prescription opioids as the rest of the world. It is no surprise that the opioid epidemic is primarily endemic to the United States. Given that the ongoing opioid epidemic is driven by illicit fentanyl, the D.E.A. has an indispensable role to play in controlling this public health crisis.

Guohua Li Montebello, N.Y. The writer is a professor of epidemiology and anesthesiology at Columbia University.

Limiting the supply and prescription of opioids for chronic pain is crucial to addressing the opioid epidemic.

In fact, there is no lack of supply of opioids for dying patients, in whom such use is appropriate. Opioids are still overused for chronic pain, for which they don’t work well , and there is overuse for acute situations, such as oral surgery , in which nonopioids are more effective and safer.

Many people seeking opioids on the street — now a dangerous market because of adulteration with fentanyl — became addicted after receiving an opioid prescription from a physician or a dentist. The Drug Enforcement Administration’s role in regulating the opioid market should be applauded, not condemned.

Adriane Fugh-Berman Gary M. Franklin Dr. Fugh-Berman is a professor in the pharmacology and physiology department at Georgetown University Medical Center. She is also paid as an expert plaintiffs’ witness, mainly for the government, in litigation over pharmaceutical marketing. Dr. Franklin is a research professor at the University of Washington and the medical director of the Washington State Department of Labor and Industries.

Dr. Shravani Durbhakula’s guest essay implicitly repeats a mistaken belief that opioids maintain effectiveness for reducing chronic pain when given daily over long periods, if addiction is not present.

This false belief was promoted by pharmaceutical companies 25 years ago and led to the opioid crisis that has affected the United States. Actually, there is compelling biological, epidemiological, experimental and clinical evidence that when taken daily, opioids cause neuroadaptations that enhance sensitivity to pain (including with patients who show no addictive behaviors).

I have been treating opioid-dependent chronic pain patients for more than three decades. The culture of opioid overtreatment has been difficult to overcome because of a confluence of factors, but since the 2016 guidelines from the Centers for Disease Control warned against extended use, opioids are being prescribed less and deaths from the legal use of prescription opioids have declined.

When physicians try to taper opioids, it often produces resistance from the patient because of physiological and psychological withdrawal discomfort. Thus, physicians are at a loss as to how to treat opioid-dependent chronic pain patients other than maintaining opioids. Good treatments are available, though, and it is quite fulfilling to work with these patients.

Jon Streltzer Honolulu The writer is a psychiatrist and emeritus professor of psychiatry at the John A. Burns School of Medicine at the University of Hawaii.

As a pain management physician myself for more than 30 years, I believe that Shravani Durbhakula presents what may be charitably deemed a distorted view of the management of pain in this country.

Throughout the piece, it is indicated that poor pain management is mainly because of restrictions on prescribing opioids. This conveniently overlooks the fact that much pain, such as neuropathic pain, which includes cancer pain where the tumor either invades or stretches the nerve, responds better to nonopioids.

Other conditions, such as diabetic neuropathic pain and fibromyalgia, are just as poorly managed, and all are better managed with anticonvulsants and certain antidepressants. Perhaps Dr. Durbhakula might have explained this.

And as Dr. Durbhakula briefly alludes to at the end of the essay, the main reason that pain is so poorly managed in this country is that most physicians receive little education in pain management in medical school and postgraduate training programs.

A more useful piece would be entitled “Medical Schools Need to Get Into Pain Management.”

Steven A. King Philadelphia

Dr. Shravani Durbhakula’s essay mirrors my own experience. I am horrified that my primary care physician of many years dismissed my pleas for pain medication for sciatica, an excruciating and common nerve disorder.

Instead of prescribing an opiate, my doctor gave me an anti-inflammatory that did little to reduce the bolts of electricity shooting from my hip to my toes, which make walking and sleeping impossible. It wasn’t until six weeks after the onset of sciatica, when I threatened to use street drugs, that my doctor came through with a prescription for five milligrams of oxycodone every six hours, which did not relieve the pain. As a result, I am seeing a pain management specialist.

The American Medical Association and the D.E.A. seem to be in lock step in denying adequate pain medication to patients with genuine chronic pain, while veterinarians have no problem providing pain relief to animals.

How, as a society, have we gotten so far off-track, punishing patients for the abuse of addicts? If such a law were applied to driver’s licenses, we would take cars away from safe drivers to keep bad drivers off the road.

Stacia Friedman Philadelphia

The guest essay about the role of the Drug Enforcement Administration uses the word “overdose” in relation to incidents where individuals suffer serious and sometimes fatal effects from using opioids.

Overdose suggests that the person either knowingly or accidentally took an excessive amount of a medication with known potency. In the current epidemic of incidents involving street drugs, the correct term is “poisoning,” since the drugs have typically been adulterated with either very potent synthetic opiates or with a variety of other drugs. The user, being unaware of the actual potency of what is being used or what adulterants have been added, can be seriously affected even when taking his or her usual dose.

Calling these incidents overdoses is a way of blaming the victims, while calling them “poisonings” opens several avenues to reduce harm, such as making tests for opiate potency readily available to users, or making medical-grade opioids accessible as a viable alternative to street drugs.

I encourage your writers, editors and contributors to use poisonings rather than overdoses unless it is clear that the episode being described involved a genuine, correctly labeled, prescription opioid medication.

Henry Olders Westmount, Quebec The writer is a geriatric psychiatrist and a retired assistant professor in the department of psychiatry at McGill University.