By Sonal Srivastava, Amity Law School, Lucknow.

Union Finance Minister Arun Jaitley inaugurated the three day conference on “Networking the Networks” on November 2, 2015 in the capital city of India- New Delhi. Among the key participants were the representatives of top international groups including Interpol, the Egmont Group of Financial Intelligence Units, Financial Action Task Force, the Eurasian Group on combating money laundering and financing of terrorism and the Asia/Pacific group on money laundering.

The proposal to hold the “Networking the Networks” was agreed upon during the last visit of the Executive Director of UNODC, Yury Fedotov, on December 3, 2015 in a meeting with the Revenue Secretary. In his meet with Mr. Jaitley, Mr. Fedotov had expressed his sincere gratitude and appreciation towards India for agreeing to conduct this meeting in India. He also reaffirmed UNODC’s readiness to further extend support to India and the region in countering transnational organized crime and promoting drug prevention, treatment and care among vulnerable population groups.

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He also suggested that this could start with India hosting a “Networking the Networks” event on illicit money flows involving financial intelligence units from the region and beyond, as well as, the establishment of a regional coordination mechanism for intelligence sharing in criminal matters.

WHAT IS MONEY LAUNDERING?

Money laundering is the generic term used to describe the process by which criminals disguise the original ownership and control of the proceeds of the criminal conduct by making such proceeds appear to have derived from a legitimate source.

The processes by which criminally derived property may be laundered are extensive. Though criminal money may be successfully laundered without the assistance of the financial sector, the reality is that hundreds of billions of dollars of criminally derived money is laundered through financial institutions, annually. The nature of the services and products offered by the financial services industry (namely managing, controlling and possessing money and property belonging to others) means that it is vulnerable to abuse by money launderers.

HOW IS THE OFFENCE OF MONEY LAUNDERING COMMITTED?

Money laundering offences have similar characteristics globally. There are two key elements to a money laundering offence:

  1. The necessary act of laundering itself i.e. the provision of financial services; and
  2. A requisite degree of knowledge or suspicion (either subjective or objective) relating to the source of the funds or the conduct of a client.

The act of laundering is committed in circumstances where a person is engaged in an arrangement (i.e. by providing a service or product) and that arrangement involves the proceeds of crime. These arrangements include a wide variety of business relationships e.g. banking, fiduciary and investment management.

The requisite degree of knowledge or suspicion will depend upon the specific offence but will usually be present where the person providing the arrangement, service or product knows, suspects or has reasonable grounds to suspect that the property involved in the arrangement represents the proceeds of crime. In some cases the offence may also be committed where a person knows or suspects that the person with whom he or she is dealing is engaged in or has benefited from criminal conduct.

RELEVANCE OF THE MEETING

  • South Asia region is prone to illicit financial flow from drugs, human trafficking, tax fraud, etc.
  • The popularity of informal money transfer is being misused by criminal networks for the transfer of criminal proceeds, as well as for terrorism financing.

So, to combat these problems regarding criminal networks, it is important to disrupt the financial flows of the criminal networks and to disrupt these financial flows it is necessary that the law enforcement agencies need to operate fast with their foreign partners in an effective manner.

GOALS OF ‘NETWORKING THE NETWORKS’ (ESPECIALLY ITS COMPONENT ON ILLICIT FINANCIAL FLOWS)

     It is basically focused on two goals-

  1. To connect the existing international and regional law enforcement cooperation centres to enable fast inter regional cooperation.
  2. To use the capacities of these networks to disrupt organized crime and the illicit financial flows related to it through the exchange of intelligence and providing platform for coordination of joint/parallel operations.

AIMS OF THE MEETING

  • To bring together law enforcement senior officials, as well as representatives of the existing global networks and successful regional networks from other regions, who can share their experience on combating illicit financial flows.
  • To identify the best practices of the existing international organizations and regional platforms for fast cooperation on illicit financial flows and capacity building covering a wide range of issues such as organization and set up of regional networks, connection between various networks, new methodologies to disrupt illicit financial flows, capacity building, use of IT tools, international and interagency cooperation.

    RECOMMENDATIONS AND PROPOSALS

  1. The participants produced recommendations on best practices and solutions which can be applied to the nascent South Asian Regional Information and Coordination Centre (SARICC)
  2. The proposal for creation of regional platform for exchange of information/intelligence on drug trafficking and related matters such as money laundering, etc with India in the lead, for the South Asia Region, as discussed during the last visit of Executive Director of UNODC was passed.
  3. This platform would initially comprise the founding members- Bangladesh, Bhutan, Myanmar, India, Maldives, Nepal and Sri Lanka and later on would be open to inclusion of other countries, international organization as decided by founding members based on shared concern.

Owing to its  its geographical position, India has been a victim to illicit drug trafficking, informal money transfers, money laundering, etc. Thus, the creation of regional cooperation mechanism among countries of the region having shared interest in curbing these problems is undoubtedly in India’s interest. Further, the international community has high expectations of India’s leadership role in this regard in the region. During the recent visit of the Executive Director of the UNODC to India, he expressed the expectation that India should emerge as the leading player in the area of anti-drug trafficking and other related transnational organized crimes, not only in this region but also beyond especially in view of the fact of increase in illicit poppy cultivation in Afghanistan and Myanmar and manufacture of synthetic drugs in Myanmar. He was accordingly keen to have discussions at the strategic level in India as regards the initiatives which India could take in this matter.

The need of the hour is that there should be a strong regional cooperation among the nations of South Asia to effectively combat the issues of transnational and organized crimes. This conference was a stepping stone in this direction, with a hope that in future these nations would come up together to resolve the issue of these crimes in the most effective manner with India emerging as the leading player.

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