Following the Money: Money Laundering and Terror Funding

Money laundering is the processing of criminal proceeds to disguise their illegal origin, so that ill-gotten gains appear legitimate. That is the Financial Action Task Force's own definition, and it captures the essence: a drug lord's cash, a bribe, or a terror fund is useless until it can be spent without questions, and laundering is the machinery that makes dirty money spendable. In India it corrodes the financial system, bleeds the exchequer, and, most dangerously, bankrolls terrorism and organised crime.

This article follows the money through its three classic stages, maps the damage laundering does, sets out India's legal armoury from the PMLA to the FIU-IND, examines the global rulebook of the FATF, and confronts the newest frontier: crypto, DeFi, AI and globalisation. It is also the finance half of the counter-terrorism story told in the previous article.

The three stages: how dirty money becomes clean

Every laundering scheme, from a hawala operator in Old Delhi to a DeFi mixer on the blockchain, follows the same three-stage logic. Learn this table cold: it is the spine of every prelims and mains question on the topic.

The predicate offence is the crime that generated the dirty money in the first place, drug trafficking, corruption, fraud or terrorism. Under the PMLA, laundering is a standalone offence: the Enforcement Directorate can pursue the launderer even while the predicate offence is tried separately, which is why PMLA cases often outlive the original crime.

Classic Indian illustrations make the stages concrete. In the Nirav Modi-Punjab National Bank fraud, fraudulent Letters of Undertaking placed illicit credit into the banking system and layered it through overseas entities. The Panama Papers exposed offshore accounts used to layer undeclared income for tax evasion. And hawala, the trust-based informal transfer system, funded the 1993 Bombay bombings and the 2008 Mumbai attacks, a straight placement-to-terror pipeline.

Why laundering happens: the motives

Laundering is never the goal; it is the enabler. The motives behind it explain why the crime keeps growing even as enforcement tightens.

• Concealing illicit profits : criminals need their earnings to look like legitimate income before they can spend or invest them.
• Tax evasion : undeclared income is routed through offshore accounts and shell entities to escape taxation.
• Funding criminal activity : laundered money bankrolls terrorism, drug trafficking and organised crime; terror financing is laundering's most dangerous output.
• Circumventing regulation : moving funds across borders undetected, bypassing anti-money-laundering laws and capital controls.
• Exploiting system gaps : weak regulatory oversight, benami properties and thinly supervised financial institutions provide the cracks.
• Political corruption : bribes and misappropriated public funds are concealed through shell companies and offshore routes, as the Commonwealth Games investigations illustrated.

The damage: impact on economy and security

The 2013 mains question called money laundering a threat to a country's 'economic sovereignty'. The table below is the structured answer to why.

The security row is the one GS-3 examiners care about most: laundering is not merely a white-collar crime but the logistics department of terrorism. Choke the money and the gun falls silent, which is the entire logic of the No Money for Terror platform.

India's legal armoury: the PMLA and its allies

The Prevention of Money Laundering Act (PMLA), 2002 is India's principal anti-money-laundering law. It criminalises money laundering, provides for the attachment, adjudication and confiscation of the proceeds of crime, and empowers the Enforcement Directorate to investigate. Its definition is deliberately wide: directly or indirectly indulging in, knowingly assisting, concealing, possessing, acquiring, using, or projecting the proceeds of crime as untainted property.

The PMLA does not work alone. FIU-IND, the Financial Intelligence Unit, receives and analyses suspicious-transaction reports from banks and insurers and disseminates intelligence to the ED, CBI and RBI. The Enforcement Directorate investigates and prosecutes under the PMLA and FEMA. The Economic Intelligence Council, chaired by the Finance Minister, coordinates intelligence across agencies. And two allied statutes complete the net: the Black Money (Undisclosed Foreign Income and Assets) Act, 2015 targets offshore tax evasion with heavy penalties, while the Benami Transactions (Prohibition) Amendment Act, 2016 lets the state confiscate property held under fictitious names.

Closing the new loopholes: the 2023-24 upgrades

Money laundering mutates faster than statutes, so the PMLA rules were significantly tightened in 2023-24 to catch the crypto economy, opaque ownership and professional enablers.

• Virtual digital assets covered : crypto exchanges, wallet providers and VDA service providers became 'reporting entities' with KYC and transaction-reporting duties.
• Beneficial ownership threshold lowered : the ownership bar for identifying the real owner behind a company or trust fell from 25 per cent to 10 per cent, piercing shell-company veils.
• Professionals roped in : chartered accountants, company secretaries and cost accountants became reporting entities for designated client transactions like real-estate deals and company formation.
• Non-profits watched : NPO clients must be registered on the NITI Aayog DARPAN portal, with stricter records for transactions above Rs 10 lakh, blocking the charity-to-terror pipeline.
• Politically exposed persons : enhanced due diligence and comprehensive records for PEPs, targeting corruption-linked laundering.
• Wider 'proceeds of crime' : the definition now covers assets from related or similar criminal activity, not just the scheduled offence itself.

The PMLA debate: power versus safeguards

A strong law invites a hard question, and mains answers must carry both sides. The PMLA's critics argue that its extraordinary powers tilt the scales against the accused.

• Stringent bail, Section 45 : the 'twin test' requires the court to believe the accused is not guilty and unlikely to reoffend, making bail exceptionally difficult.
• Reversed burden, Section 24 : the accused must prove assets are legitimate, departing from 'innocent until proven guilty'.
• No ECIR copy : the ED need not share its Enforcement Case Information Report, the equivalent of an FIR, at arrest.
• Admissible statements : statements made to ED officials are admissible as evidence, which critics say risks coerced confessions.
• Political misuse : the ED's sweeping discretionary powers have drawn persistent allegations of selective use against opponents and activists.

The defence is deterrence and results: over 1,700 PMLA cases have gone to trial with a conviction rate of about 94 per cent in decided cases, and the wide definitions are what let investigators reach layered, cross-border schemes. The balanced mains line: a law this powerful needs equally powerful judicial oversight, and the Supreme Court's continuing engagement with the PMLA keeps that tension live.

The global rulebook: FATF and friends

The Financial Action Task Force (FATF) is the intergovernmental body that sets global standards for anti-money-laundering and countering the financing of terrorism. Founded in 1989 on a G7 initiative and headquartered in Paris, it issues 40 Recommendations that member countries must implement; India has been a member since 2010. Two recommendations matter most for current affairs: Recommendation 15 on virtual assets and service providers, and Recommendation 16, the 'travel rule' requiring originator and beneficiary information on transfers.

The FATF's enforcement teeth are its two public lists, reviewed at every plenary (February, June, October). The black list, formally 'High-Risk Jurisdictions subject to a Call for Action', and the grey list, formally 'Jurisdictions under Increased Monitoring', name countries with strategic AML/CFT deficiencies. As of the June 2026 plenary:

• Black list: 3 countries : Iran, North Korea (DPRK) and Myanmar. The first two face FATF counter-measures; Myanmar faces enhanced due diligence. Pakistan, grey-listed from 2018 to 2022 partly after Indian diplomatic pressure, is currently off the lists.
• Grey list: 22 jurisdictions : including Nepal, Syria, Yemen, Lebanon, Kenya, Vietnam, Haiti, Laos, Bulgaria, Monaco, the British Virgin Islands and others. At the June 2026 plenary, Iraq and Bosnia and Herzegovina were added, while Algeria and Namibia were removed after completing their action plans.
• Cost of listing : grey-listing triggers mandatory enhanced due diligence worldwide, raising transaction costs and depressing capital inflows; IMF research estimates inflows fall by about 7.6 per cent of GDP on average.

Beyond the FATF, the global architecture includes the Vienna Convention (1988), the first treaty to criminalise laundering linked to drug trafficking; the 1999 Convention for the Suppression of the Financing of Terrorism; the UN Convention against Transnational Organized Crime (2000) and the UN Convention against Corruption (2003); the Basel Committee principles for bank supervision; the Wolfsberg Principles, private-sector banking best practices; the Egmont Group, a network of over 180 national financial intelligence units sharing intelligence; and the UN Global Programme against Money Laundering (1997), which gives technical assistance to states.

The new frontier: technology and globalisation

The 2021 mains question asked precisely this: how emerging technologies and globalisation contribute to money laundering. The answer is that technology has industrialised each of the three stages.

The enforcement challenges follow: complex tech that defeats legacy AML systems; a large cash-based shadow economy in real estate, gems and jewellery; judicial delays with over 1,700 PMLA cases pending; shell companies and benami assets hiding true ownership; cross-border cases tangled in bank secrecy and slow extradition; and regulators racing to build cyber-forensic capacity. The answer is RegTech and SupTech: AI, blockchain analytics and data-driven supervision on the state's side of the arms race.

No Money for Terror: the finance front of counter-terrorism

Terror financing is laundering with a deadlier purpose, so the global answer to both converges in the No Money for Terror (NMFT) conference. Launched by France in 2018 and held in Australia in 2019, the third edition was hosted by India in New Delhi on 18-19 November 2022 with delegates from 72 countries and 15 international organisations, the direct subject of the 2023 mains question.

• Aim : build global consensus on denying terrorist groups access to financial resources, with 'no distinction between good and bad terrorism'.
• Objectives : global cooperation in investigating and prosecuting terror funding; information-sharing between financial intelligence units; tackling crypto and dark-web misuse; uniform asset-freezing standards; strengthening FATF Recommendations as the benchmark.
• Four sessions : global trends in terror financing; formal and informal funding channels; emerging technologies; international cooperation.
• Chair's statement : UN sanctions listings must be objective and evidence-based, free from political duality; flagged terror safe havens and drone-based weapons transport.
• Permanent secretariat : India offered to host a permanent NMFT secretariat to sustain global focus, complementing the FATF, and to circulate a discussion paper to all participants.

For mains answers, NMFT is the international roof over domestic tools like FIU-IND and the ED: it commits states to a whole-of-government and whole-of-society approach, drawing in the private sector, fintech and social-media companies to track the evolving sources and methods of terror finance.

Way forward

• Strengthen AML supervision : risk-based supervision, strict KYC with periodic updates, and stronger institutional capacity.
• Regulate emerging sectors : bring virtual digital assets, real estate, jewellery and high-value dealers fully under AML/CFT with beneficial-ownership disclosure.
• Inter-agency coordination : real-time intelligence sharing among the ED, FIU-IND, RBI, CBI and international bodies.
• Public-private partnerships : institutionalise government and financial-sector collaboration for early detection.
• Global cooperation : stronger Mutual Legal Assistance Treaties and asset-recovery networks for tracing, freezing and extradition.
• Leverage technology : AI, blockchain analytics and data-driven supervision to detect laundering proactively.

UPSC and this topic: PYQ weightage

• 2021 : 'Discuss how emerging technologies and globalisation contribute to money laundering. Elaborate measures to tackle the problem at national and international levels.'
• 2013 : '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 control this menace?'
• 2023 (linked) : the NMFT conference question on sources of terror funding sits at the intersection of this article and the terrorism article.
• Trend : the topic is asked roughly once a decade in its pure form, but its finance-crime-terror linkages appear inside terrorism, organised-crime and internal-security questions far more often.

The textbook definition: the Vienna Convention's Article 3.1

The Vienna Convention of 1988 defines money laundering in its Article 3.1 as "the conversion or transfer of property, knowing that such property is derived from any offense(s), for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in such offense(s) to evade the legal consequences of his actions." The definition has two hinges that examiners love: knowledge of the illicit origin, and purpose, to conceal the origin or to help evade the law. India's PMLA mirrors this structure in its own Section 3 definition of the offence.

The scale of the problem: the FATF estimate

The Financial Action Task Force estimates that 2 to 5 per cent of global GDP, up to 2 trillion dollars in a year, is laundered globally. The figure is an estimate, not a census, and must always be labelled as the FATF's. Its mains use is proportion: laundering is a macroeconomic-scale phenomenon, which is why anti-money-laundering supervision sits with central banks and finance ministries, not just with police forces.

Laundering methods at a glance

Methods are textbook categories, not recipes: mains answers name the channel and explain why regulators watch it. The standard eight are below.

The FATF's 2024 verdict on India

The FATF's Mutual Evaluation Report on India, adopted at its June 2024 plenary in Singapore and released that September, placed India in the "regular follow-up" category, a distinction shared with only four other G20 countries (the UK, France, Italy and Russia, the last now suspended from FATF). It recognised a high level of technical compliance with the 40 Recommendations and good results on international cooperation, beneficial-ownership transparency, use of financial intelligence and depriving criminals of their assets.

The report's asks are the mains material. It said major improvements were needed to strengthen prosecution in money-laundering and terror-financing cases, noting that investigations had risen faster than prosecution complaints and concluded trials, with progress disrupted during 2014-22 while the PMLA's constitutionality was contested. It also asked for risk-based supervision of the non-profit sector against terror-financing abuse. India's largest laundering risks, it said, originate domestically: fraud including cyber-enabled fraud, corruption and drug trafficking. The sharpest terror-financing threat comes from ISIL or Al-Qaeda-linked groups active in and around Jammu and Kashmir, alongside Northeast insurgencies and Left-Wing Extremism. The enforcement gap is concrete: between January 2019 and October 2024 the ED filed 911 prosecution complaints, but trial was pending in 257 cases and convictions were secured in only 42 (99 individuals sentenced), a 4.6% conviction rate (MoS Finance Pankaj Chaudhary, Rajya Sabha, 10 December 2024).

Two figures from the report travel well into answers. Adult financial inclusion rose from 53 per cent in 2014 to 78 per cent in 2021, widening the formal net that laundering must cross. And under the regular-follow-up discipline India reports to the FATF every three years, with its next full evaluation due in 2031.

The Supreme Court on PMLA: Vijay Madanlal Choudhury (2022)

In Vijay Madanlal Choudhury v. Union of India (July 2022), the Supreme Court upheld the PMLA's core architecture: the Enforcement Case Information Report need not be treated like an FIR, the Section 45 twin conditions for bail stand, the Section 24 presumption places the burden of proving lawful origin on the accused, and statements recorded by ED officers are admissible. The judgment settled the law's constitutionality after the disruption the FATF later noted. Review petitions kept the safeguards debate alive, and the 2023-24 amendments answered part of it by widening the net to virtual assets and lowering beneficial-ownership thresholds. Mains answers should carry both sides: deterrence through stringent process, accountability through judicial review.

Enforcement agencies at a glance

Black money: the concept behind the statutes

Black money is income or wealth that escapes the tax net, whether generated by crime or by legitimate activity concealed from the authorities. It matters for laundering because it is the raw material: every laundering scheme begins with value that cannot be shown openly. India's statutory answer is the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, which targets undisclosed foreign income and assets with steep tax and penalties, alongside the Benami Transactions (Prohibition) Amendment Act, 2016 for property held in others' names.

Key Terms

• Money laundering: Money laundering is the process of disguising the origins of criminal proceeds so they appear legitimate, typically in three stages: placement, layering and integration. It matters for internal security because terror groups, drug cartels and corrupt officials all depend on it to use their money. Example: Shell companies routing bribe money into real estate.
• Prevention of Money Laundering Act (PMLA), 2002: The Prevention of Money Laundering Act, 2002 is India's core anti-money-laundering statute, criminalising the laundering of proceeds of scheduled offences. It empowers the Enforcement Directorate to attach, search, seize and arrest. The Supreme Court upheld its wide powers in the 2022 Vijay Madanlal judgment. It matters as the backbone of India's financial-crime enforcement. Example: ED attachments of laundered assets under PMLA.
• NMFT 2022: NMFT 2022 was the third No Money for Terror ministerial conference, hosted by India in New Delhi in November 2022 with delegations from over 70 countries. It focused on new payment technologies, non-profit abuse and international cooperation. It matters as the moment India positioned itself as a global leader against terror financing. Example: Over 70 delegations attending the New Delhi conference.
• Placement: Placement is the first stage of money laundering, in which illicit cash enters the financial system through deposits, purchases or smurfing. It is the riskiest stage for launderers because cash is traceable. Hawala transfers and mule accounts are common placement routes in India. Example: Splitting drug cash into small bank deposits.
• Layering: Layering is the second stage of money laundering, in which illicit funds are moved through complex transactions, shell companies and cross-border transfers to obscure their origin. It matters because sophisticated layering defeats routine audits, requiring financial intelligence to unravel. Example: Routing funds through layers of shell firms in tax havens.
• Integration: Integration is the third and final stage of money laundering, after placement and layering: the laundered funds re-enter the legitimate economy as apparently clean money, through investments, businesses or assets that give the criminal proceeds a lawful cover.
• predicate offence: A predicate offence is the underlying crime, such as drug trafficking, corruption or fraud, whose proceeds become the subject of money laundering. Under PMLA, laundering can only be charged if linked to a scheduled predicate offence. It matters because the predicate anchors the entire prosecution. Example: Bribery as the predicate offence behind a laundering case.
• Nirav Modi-Punjab National Bank fraud: The Nirav Modi-Punjab National Bank fraud was the over Rs 13,000-crore scam unearthed in 2018, in which jeweller Nirav Modi and associates obtained fraudulent Letters of Undertaking from Punjab National Bank's Brady House branch. It matters as India's biggest bank fraud, exposing failures of internal controls and cross-border laundering. Example: Fraudulent LoUs issued from PNB's Mumbai branch.
• Panama Papers: The Panama Papers were the 2016 leak of 11.5 million documents from the law firm Mossack Fonseca, exposing offshore holdings of the global elite. In India they triggered a multi-agency probe into undisclosed foreign assets. They matter as the leak that mainstreamed the fight against offshore tax evasion. Example: The 2016 expose of secret offshore companies.
• hawala: Hawala is the informal value-transfer system in which money is moved through trusted brokers without physical cross-border movement, settled later through trade or cash. It matters because it is the preferred channel for terror financing, FICN distribution and laundering, being fast, cheap and nearly traceless. Example: Hawala networks moving terror funds into Kashmir.
• Scheduled (predicate) offences: Scheduled offences under PMLA are the crimes listed in its Schedule whose proceeds trigger money-laundering liability, covering corruption, drug trafficking, fraud, terrorism and more. The 2023 expansion widened the net to GST and environmental offences. They matter because only scheduled-offence proceeds can ground a PMLA case. Example: Corruption and drug offences listed in the PMLA Schedule.
• FIU-IND: The Financial Intelligence Unit-India is the national agency for receiving and analysing suspicious transaction reports from banks and financial institutions, functioning under the Finance Ministry since 2004. It shares intelligence with the ED, CBI and foreign FIUs through the Egmont Group. It matters as the financial tripwire of the AML system. Example: FIU-IND's suspicious transaction reports triggering ED probes.
• Enforcement Directorate: The Enforcement Directorate is the central agency that investigates money laundering under PMLA and foreign-exchange violations under FEMA. Its powers of attachment, search, seizure and arrest make it the most feared economic-offences agency. The Supreme Court upheld its wide powers in the 2022 Vijay Madanlal judgment. Example: ED attachments of assets in bank-fraud cases.
• Economic Intelligence Council: The Economic Intelligence Council is the apex body for coordination among economic intelligence and enforcement agencies, chaired by the Finance Minister with heads of the ED, DRI, FIU-IND and others as members. It matters as the forum where economic-offence strategy is set. Example: EIC coordination of the anti-black-money drive.
• Black Money (Undisclosed Foreign Income and Assets) Act, 2015: The Black Money (Undisclosed Foreign Income and Assets) Act, 2015 targets undisclosed foreign income and assets with stringent penalties and prosecution, going beyond the Income Tax Act. It was part of the post-2014 crackdown on offshore evasion. It matters as the dedicated statute for foreign black money. Example: Prosecutions for undisclosed Swiss bank accounts.
• Benami Transactions (Prohibition) Amendment Act, 2016: The Benami Transactions (Prohibition) Amendment Act, 2016 overhauled the 1988 Benami Act, defining benami property, empowering authorities to confiscate it and prescribing jail terms. It matters because benami holdings are a classic laundering layer for corruption and crime proceeds. Example: Confiscation of benami flats held in servants' names.
• Politically exposed persons: Politically exposed persons are individuals entrusted with prominent public functions, such as ministers, judges and senior officials, whose accounts banks must monitor more closely for corruption proceeds. The FATF mandates enhanced due diligence on them. It matters because PEPs are the highest-risk customers for laundering. Example: Enhanced bank scrutiny of ministerial accounts.
• Financial Action Task Force (FATF): The Financial Action Task Force is the 39-member intergovernmental body, set up in 1989, that sets global standards against money laundering and terror financing. Its grey and black lists pressure non-compliant jurisdictions, as Pakistan's 2018-2022 grey-listing showed. It matters because FATF evaluations shape India's own AML laws and its diplomatic case against terror finance. Example: Pakistan's grey-listing from 2018 to 2022 over terror-financing gaps.
• Vienna Convention (1988): The Vienna Convention of 1988, formally the UN Convention Against Illicit Traffic in Narcotic Drugs, was the first treaty to criminalise money laundering linked to drug trafficking. It matters as the origin of the global AML regime, later extended to all serious crime. Example: The 1988 treaty that first defined drug-money laundering.
• 1999 Convention for the Suppression of the Financing of Terrorism: The 1999 UN Convention for the Suppression of the Financing of Terrorism criminalises the provision of funds for terrorist acts and requires states to freeze terrorist assets. India is a party. It matters as the legal basis for international cooperation against terror finance. Example: Asset-freezing obligations against designated terrorists.
• UN Convention against Transnational Organized Crime (2000): The UN Convention against Transnational Organized Crime, adopted in Palermo in 2000, is the principal treaty against organised crime, covering trafficking, smuggling and money laundering. India ratified it in 2011. It matters as the framework for mutual legal assistance against crime syndicates. Example: India's 2011 ratification enabling cross-border crime cooperation.
• UN Convention against Corruption (2003): The UN Convention against Corruption, adopted in Merida in 2003, is the global anti-corruption treaty covering prevention, criminalisation and asset recovery. India ratified it in 2011. It matters because asset recovery provisions let India pursue laundered wealth parked abroad. Example: Asset-recovery requests for fugitive economic offenders.
• Basel Committee principles: The Basel Committee principles are the global standards for banking supervision set by the Basel Committee on Banking Supervision, including its core principles on customer due diligence and AML controls. They matter because Indian banks' KYC and AML norms flow from Basel standards. Example: KYC norms rooted in Basel customer-due-diligence standards.
• Wolfsberg Principles: The Wolfsberg Principles are the private-banking anti-money-laundering guidelines issued in 2000 by eleven global banks. They set the industry benchmark for correspondent banking and PEP controls. They matter because they show how global banks self-regulate beyond statutory minimums. Example: Global banks' enhanced checks on correspondent accounts.
• Egmont Group: The Egmont Group is the network of 170-plus national Financial Intelligence Units for secure information exchange, founded in 1995. FIU-IND is a member. It matters because cross-border laundering can only be traced when FIUs share intelligence. Example: FIU-IND exchanging laundering intelligence with foreign counterparts.
• UN Global Programme against Money Laundering: The UN Global Programme against Money Laundering is the UNODC's technical-assistance programme, running since 1997, that helps countries build AML laws and institutions. It matters as the capacity-building arm of the global AML regime, especially for developing countries. Example: UNODC assistance in drafting AML legislation.
• No Money for Terror (NMFT): No Money for Terror is the international ministerial conference against terror financing, held in Paris (2018), Melbourne (2019) and New Delhi (2022). The Delhi conference pushed for unified action against formal and informal funding channels. It matters as India's flagship diplomatic initiative on countering terror finance. Example: The November 2022 NMFT conference hosted in New Delhi.
• Black money: Black money is income or wealth that escapes the tax net, whether generated by crime or by legitimate activity concealed from the authorities. Example: undisclosed foreign income and assets targeted by the Black Money Act, 2015.
• Round tripping: Round tripping is the laundering technique of routing funds out to a tax haven and bringing them back as foreign investment. Example: domestic black money returning disguised as FDI from Mauritius.
• Shell company: A shell company is a paper entity with no real business operations, used to layer transactions and hide beneficial owners across jurisdictions. Example: chains of shell firms used to obscure the ultimate owner of laundered funds.
• Smurfing (structuring): Smurfing, or structuring, is splitting large sums into small deposits below reporting thresholds to defeat cash-transaction reporting. Example: multiple sub-threshold cash deposits made the same day at different branches.
• Beneficial owner: A beneficial owner is the real person who ultimately owns or controls a company or asset, behind nominees and corporate layers. Example: the 2023 PMLA rule change lowering the beneficial-ownership identification threshold from 25 per cent to 10 per cent.
• Designated Non-Financial Businesses and Professions (DNFBP): DNFBPs are non-financial businesses like dealers in precious metals and stones, real-estate agents and certain professionals that FATF standards bring under anti-money-laundering supervision. Example: jewellers and real-estate intermediaries as PMLA reporting entities.
• Virtual Asset Service Provider (VASP): A Virtual Asset Service Provider is a business dealing in virtual digital assets, such as a crypto exchange or wallet provider, brought under PMLA reporting obligations in March 2023. Example: crypto exchanges filing suspicious transaction reports with FIU-IND.
• Trade-based money laundering: Trade-based money laundering is disguising illicit value as legitimate trade through over- or under-invoicing, multiple invoicing or phantom shipments. Example: inflated import invoices used to move value across borders.

Practice questions