When the
Hon. PM announce the demonetization of 1000 Rupees and 500 Rupees notes the
entire country was shocked, and most importantly those people who are stock
piling black money had a sleepless night.
“If we
have to nab a thief, there is not logic of informing the thief about the plan.”
In the
announcement, Hon. PM said that the step to demonetize those notes is to fight
terror funding, black money and fake notes.
The
article will show an aspect where the demonetization will help in fighting
money laundering.
Money laundering is a process of converting a black
money/illegal money into white money. Black money or illegal money means the
money which a person acquired through illegal means.
Here we
are going to discuss about how the black or illegal money is converted into
white money.
First of
all, a person (a criminal or a politician or a bureaucrat or a business man) earns
black money through different illegal ways like extortion, bribery, corruption,
smuggling, selling drugs etc. and he collects all those money as one.
Then the he will start dividing the
money into smaller denominations.
Example,
If
he earns 1 Crore Rupees, he will divide the amount as
10
Lakhs + 15 Lakhs + 5 Lakhs + 20 Lakhs + 2 Lakhs + 7 Lakhs + 1 Lakh + 17 Lakhs +
13 Lakhs + 6 Lakhs + 4 Lakhs
Now he will start using this
smaller amounts into different ways like buying investing in share markets,
buying jewelries, buying apartments, opening fixed deposit account in bank etc.
In the process, he will start investing the black money into market.
The
process of investing the black money into the market is known as Placement.
After the step of placement, he
will start Layering.
In this step,
he will take back his money from a unit in which he invests and he will again
invest the amount into some other unit. Likewise, all the investments will be
taken back to invest in some other units again.
So, he
will make layers of investments one over another by his black money.
After
years of layering he will at last start disinvesting his money from all the
units, this step is called Integration.
When he integrates the whole of 1 crore Rupees which he earns from illegal
activities, the money will become a white money because the money has layers of
legal sources and he can deposit the whole amount in the bank.
The policy
of demonetization will stop the money launderers in the first step that is placement. He will not be able to invest
his money in any units and demonetization compels him to go directly to bank
for the deposit. Here the intelligence agency will be alerted and he will be
book immediately, as the source of the money is not legal.
We all
know that politicians corrupt, bureaucrats take bribes and anti-national
elements use extortion, drug mafia, smuggling of illegal things as a mode to
franchise their units. All these malpractices will be stopped by the
demonetization.
The step
creates a panic to common people of India and also it creates an economic
standstill for a moment in the country, but those effects won’t last long. So
better not to get panicked, no one will lose even a single penny he/she saves
and the economic activities will be stabilized very soon.
It is true
that demonetization will help in curbing corruption and other illegal trade
practices. So, we need to cooperate our government in fighting black money,
terror funding and fake notes to shape a brighter future.
“If we
have to gain something great in the near future, we have to sacrifice something
now.”
