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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.
Paper
GS-III
Question
Q9
Marks
10M
Word Limit
150W
Practice Answer Writing
Word limit: 150 wordsMarks: 10MSuggested time: 7 min
Model answer will be available after you finish writing.
Model Answer
Model Answer
Source: PW OnlyIAS · PW OnlyIAS Editorial
335 wordsHas diagram
Answer
Approach:IntroductionRecognize the connection between emerging technologies, globalization, and the rise in money laundering.BodyDiscuss the role of various emerging technologies and aspects of globalization in facilitating money laundering.Identify and mention measures to counter money laundering.Do substantiate with examples.ConclusionConclude, reiterating the challenges posed by emerging technologies and globalization in money laundering and stress the importance of robust regulations, cooperation, and advanced technology usage in combating this financial crime.
Introduction
Money laundering, the act of making illegal income appear lawful, has intensified with the rise of digital technologies and globalization. These advancements have eased cross-border transactions and enhanced anonymity, boosting such unlawful practices.According to the United Nations Office on Drugs and Crime (UNODC), global money laundering represents 2-5% of the world’s GDP, or around $800 billion to $2 trillion each year, posing a severe global concern.Body
Contribution of Emerging Technologies and Globalization to Money Laundering:- Cryptocurrency:Anonymity of transactions in cryptocurrencies like Bitcoin is often exploited for money laundering,for example in the 2020 Twitter Bitcoin scam.
- Digital Payment Systems:Globalized digital payment systems can be misused for transferring illicit funds across borders,for example, in the Wirecard scandal.
- Offshore Banking:Globalization has facilitated easier access to offshore banking, often used to hide illicit funds,for example, the revelations from the Panama Papers.
Measures to Tackle Money Laundering:
- Regulation of Cryptocurrencies:Countries like India are considering regulating cryptocurrencies to curb money laundering.
- Strengthening of AML Laws:Anti-money laundering laws are being bolstered globally.
- International Cooperation:Global entities like Financial Action Task Force on Money Laundering (FATF) play a crucial role in setting anti-money laundering standards and promoting cooperation.
- Use of AI:Governments and banks are leveraging AI for real-time fraud detection and risk assessment.
Conclusion
While emerging technologies and globalization present challenges in the fight against money laundering, adopting stringent regulations, promoting international cooperation, and utilizing advanced technologies like AI can create robust defenses against this financial menace. Proactive and collective action is needed at both national and international levels to curb money laundering.Diagrams & Charts
Original source: PW OnlyIAS
About This Question
Paper
GS Paper III — Economy, Science & Technology, Environment
Subject
Internal SecuritySubtopic
Money-laundering and its prevention
Difficulty
Easy
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Frequently Asked Questions
What is UPSC Mains 2021 GS-III Question 9 about?▼
This question is from the Internal Security topic under GS-III (2021). It carries 10 marks with a 150-word limit. Difficulty: Easy.
Is there a model answer available for this question?▼
Yes, a 335-word model answer is available from PW OnlyIAS by PW OnlyIAS Editorial.
How should I approach this easy-level UPSC Mains question?▼
For a 10-mark question with 150-word limit, structure your answer with a brief introduction, 2-3 main body points with evidence, and a forward-looking conclusion.