Q.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.
How to approach: Address all parts of the prompt systematically—covering positive dimensions, structural constraints, and a constructive Way Forward.
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Money laundering is the process of masking the illicit origins of black money to make it appear legitimate. It is heavily utilized by tax evaders, drug cartels, and terrorist networks to integrate dirty money into the formal financial system.
Body Analysis
Contribution of Technology & Globalisation to Money Laundering
graph TD
A["Money Laundering: Methods, Challenges, and Legal Frameworks"] --> B["Legal Measures"]
A --> C["Emerging Technologies"]
A --> D["Globalization"]
B --> B1["PMLA 2002"]
B --> B2["Forfeiture Acts SAFEMOPA"]
B --> B3["FIU-IND"]
B --> B4["Vienna Convention"]
C --> C1["High-Volume Digital Transactions"]
C --> C2["Smurfing via Intermediaries"]
C --> C3["Cryptocurrencies & Decentralized Finance"]
D --> D1["Cross-Border Asset Distribution"]
D --> D2["Jurisdictional Coordination Gaps"]
D --> D3["Exploitation of Tax Havens"]1. Role of Emerging Technologies
- Digital Transactions: The massive volume of online transactions allows launderers to easily layer funds across multiple accounts.
- Smurfing: Launderers break down large sums into tiny, structured deposits using automated digital networks to evade regulatory thresholds.
- Cryptocurrencies: Decentralized, peer-to-peer virtual currencies enable anonymous, borderless transfers, bypassing traditional banking oversight.
2. Role of Globalisation
- Asset Dispersion: Globalized financial networks allow criminals to distribute assets across multiple countries, complicating tracking efforts.
- Jurisdictional Gaps: Differences in legal frameworks across nations create loopholes that launderers exploit to escape prosecution.
- Tax Havens: Countries like Panama and the Cayman Islands offer strict banking secrecy, facilitating tax evasion and shell company operations.
Measures to Combat Money Laundering
National Measures (India)
- PMLA 2002: The Prevention of Money Laundering Act provides a stringent legal framework, making money laundering a cognizable, non-bailable offense.
- Asset Forfeiture: Acts like SAFEMOPA (1976) and the NDPS Act (1985) empower authorities to seize properties acquired through illegal means.
- FIU-IND: The Financial Intelligence Unit-India acts as the central agency for receiving, processing, and analyzing suspicious transaction reports.
International Measures
- Vienna Convention: Mandates member states to criminalize money laundering linked to drug trafficking.
- FATF (Financial Action Task Force): Sets global standards and monitors compliance to prevent money laundering and terror financing.
Conclusion
As technology and globalization continue to evolve, tackling money laundering demands robust international cooperation, harmonized legal frameworks, and advanced blockchain-monitoring tools to secure the global financial architecture.
Question Specifications, Marking Rubric & Syllabus Mapping
| Examination & Year | UPSC Civil Services Mains Examination 2021 (Question 1) |
|---|---|
| Paper & Syllabus Topic | General Studies Paper III — Economy, Environment, S&T & Security → Internal Security, Cyber & Border Management |
| Marks, Word Limit & Ideal Time | 10 Marks • 150 Words • Ideal Writing Time: 7–8 Minutes |
| Directive Word & Core Demand | Discuss: Conduct a comprehensive, 360-degree exploration of the topic covering multiple perspectives. |
| Recommended Structure Split | Intro: ~20–25 Words • Body: ~100 Words (3–4 dimensions) • Conclusion: ~20–25 Words |
| AI Practice & Evaluation Tools | Upload Handwritten Answer for 3-Min Vision AI Evaluation | Generate Custom Answer & Mind Map |
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Frequently Asked Questions — UPSC Mains 2021 GS3 (Internal Security)
How should I structure the answer for this UPSC Mains 2021 GS Paper III question on Internal Security?
This 2021 GS Paper III question carries 10 marks with a 150-word limit and uses the "Discuss" directive. Address all parts of the prompt systematically—covering positive dimensions, structural constraints, and a constructive Way Forward. Follow the ideal word split (Intro: ~20–25 Words • Body: ~100 Words (3–4 dimensions) • Conclusion: ~20–25 Words) and aim to finish within 7–8 Minutes.
Which UPSC Mains syllabus topic does this 2021 question belong to?
This question is part of General Studies Paper III — Economy, Environment, S&T & Security under the syllabus module "Internal Security, Cyber & Border Management". You can explore all repeated questions from Internal Security in Acme AI's 3D PYQ Realm or filter all Internal Security PYQs on the Mains PYQ Directory.
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