Chapter 4 · Topic 4.2 · Prelims + Mains2 of 2
Money Laundering & Organised Crime: Narco-terror
Key points
- Narco-terror nexus.
1 PYQ 2017–2026
Prelims box: facts and traps
- The Prevention of Money Laundering Act, 2002 (in force 2005) lets the Enforcement Directorate attach and confiscate proceeds of crime; the Supreme Court upheld its main provisions in Vijay Madanlal Choudhary (2022).
- Measures: crypto service providers were brought under PMLA in March 2023, beneficial ownership rules, data sharing with other FIUs, and FATF and Egmont Group cooperation internationally.
- Counter-measures: anti-drone systems, the Narcotics Control Bureau's coordination (NCORD), port scanning, crop substitution and de-addiction (Nasha Mukt Bharat Abhiyaan).
Money laundering and the PMLA
Money laundering has three stages: placement (putting dirty cash into the system), layering (hiding its origin through many transactions) and integration (bringing it back as clean-looking assets).
Mains 2013 said money laundering poses a serious security threat to a country’s economic sovereignty. For India it fuels terror funding, black money, tax loss, real estate bubbles and corruption. The Prevention of Money Laundering Act, 2002 (in force 2005) lets the Enforcement Directorate attach and confiscate proceeds of crime; the Supreme Court upheld its main provisions in Vijay Madanlal Choudhary (2022).
Money laundering poses a serious security threat to a country’s economic sovereignty. What is its significance for India and what steps are required to be taken to control this menace?
Mains 2021 asked candidates to discuss how emerging technologies and globalisation contribute to money laundering. Crypto-assets, online gaming, shell companies, trade mis-invoicing and quick cross-border transfers make layering easy. Measures: crypto service providers were brought under PMLA in March 2023, beneficial ownership rules, data sharing with other FIUs, and FATF and Egmont Group cooperation internationally.
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.
Narco-terrorism and the terror nexus
Mains 2018 said India’s proximity to two of the world’s biggest illicit opium-growing states has enhanced her internal security concerns: the Golden Crescent (Afghanistan, Iran, Pakistan) to the west and the Golden Triangle (Myanmar, Laos, Thailand) to the east. Drug routes also carry arms, fake currency and trafficked people, and the money is laundered through hawala.
India’s proximity to two of the world’s biggest illicit opium-growing states has enhanced her internal security concerns. Explain the linkages between drug trafficking and other illicit activities such as gunrunning, money laundering and human trafficking. What counter-measures should be taken to prevent the same?
Mains 2024 asked candidates to explain how narco-terrorism has emerged as a serious threat across the country. Signs: drones dropping drugs and weapons in Punjab, large heroin seizures at Gujarat ports, and Myanmar drug flows in Manipur. Counter-measures: anti-drone systems, the Narcotics Control Bureau’s coordination (NCORD), port scanning, crop substitution and de-addiction (Nasha Mukt Bharat Abhiyaan).
Explain how narco-terrorism has emerged as a serious threat across the country. Suggest suitable measures to counter narco-terrorism.
Mains 2021 asked candidates to analyse the complexity and intensity of terrorism, its causes, linkages and obnoxious nexus. Causes: ideology, state sponsorship, grievances and online radicalisation. The nexus links terrorists, criminals, drug lords and corrupt officials. Measures: a single counter-terror doctrine, intelligence fusion, faster trials, financial choking and community engagement.
Analyse the complexity and intensity of terrorism, its causes, linkages and obnoxious nexus. Also suggest measures required to be taken to eradicate the menace of terrorism.
Mains box: analysis and answer points
- Signs: drones dropping drugs and weapons in Punjab, large heroin seizures at Gujarat ports, and Myanmar drug flows in Manipur.
- Money laundering has three stages: placement (putting dirty cash into the system), layering (hiding its origin through many transactions) and integration (bringing it back as clean-looking assets).
- For India it fuels terror funding, black money, tax loss, real estate bubbles and corruption.
- Likely next angle: Crypto under PMLA 2023
- Asked: Mains 2013 (GS Paper III, 10 marks): Money laundering poses a serious security threat to a country's economic sovereignty. What is its significance for India and what steps are required to be taken to control this menace?
Practice
Mains PYQs on this topic (1)
Write an answer
In 150 words, explain the significance of Money Laundering & Organised Crime with one recent example.
Flashcards (7)
PMLA enacted?
2002 (in force 2005).
SC case upholding PMLA?
Vijay Madanlal Choudhary, 2022.
Crypto under PMLA?
March 2023.
Golden Crescent?
Afghanistan, Iran, Pakistan.
Golden Triangle?
Myanmar, Laos, Thailand.
Laundering stages?
Placement, layering, integration.
Drug coordination mechanism?
NCORD.
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