What is money laundering?

What is Money Laundering? Money Laundering is the process by which money derived from criminal activities are used to conceal their illicit origin. Some people believe that money laundering originated at the time of the famous American Gangsterism that arose out of prohibition of  the banning of alcoholic drinks, Gangsters were facing difficulty in storing money that was in cash,often in small denomination in coins. So, they created businesses, one of which was laundries,for hiding ill-gotten money. The phrase 'Money Laundering' was first coined by British Newspaper 'The Guardian in 1972 in connection with Water Gate Scandal.

Money laundering involves disguising financial assets so that they can be used without detection of the illegal activity that produced them. Through money laundering, the launderer transforms the monetary proceeds derived from criminal activity into funds with an apparently legal source. Section 3 - Offence of Money-Laundering.— Offence of money-laundering.—Whosoever directly or indirectly attempts to indulge or knowingly assists or knowingly is a party or is actually involved in any process or activity connected 1*[proceeds of crime including its concealment, possession, acquisition or use and projecting or claiming] it as untainted property shall be guilty of offence of money-laundering. 1*. Subs. by Act 2 of 2013, sec. 3, for “with the proceeds of crime and projecting” (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013). Section 4 - Punishment for Money-Laundering "Whoever commits the offence of money-laundering shall be punishable with rigorous imprisonment for a term which shall not be less than three years but which may extend to seven years and shall also be liable to fine 1[***]: Provided that where the proceeds of crime involved in money-laundering relates to any offence specified under paragraph 2 of Part A of the Schedule, the provisions of this section shall have effect as if for the words “which may extend to seven years”, the words “which may extend to ten years” had been substituted. 1***. The words “which may extend to five lakh rupees” omitted by Act 2 of 2013, sec. 4 (w.e.f. 15-2-2013, vide S.O. 343(E), dated 8-2-2013).