"High-level corruption both generates and conceals criminal proceeds. Illicit funds are often laundered through real estate, educational programs, charities, and election campaigns. Companies use trade-based money laundering to evade capital controls," the International Narcotics Control Strategy Report 2012 has said.
The report, which was published in March this year covering 2011, noted that India is a significant target for both domestic and foreign terrorist groups.
The report mentioned that about 86 lakh counter terrorist financing (CTR) and 20,698 Suspicious Transaction Report (STR) were reported between April 2010 to March 2011.
India is a regional financial centre, with a rapidly growing economy and well-developed formal and informal financial systems. "India's extensive informal economy and remittance systems, porous borders, persistent corruption, and onerous tax administration and currency controls contribute to its vulnerability to economic crimes (including fraud, cyber crime, and identity theft), money laundering, and terrorist financing," it said.
According to the report, tax avoidance and the proceeds of economic crimes are the mainstays of money launderers in India, but laundered funds are also derived from narcotics trafficking and trafficking in persons, trans-national organised crime, illegal trade and corruption.
"Trans-national criminal organisations use offshore corporations and trade-based money laundering to conceal the proceeds of crime. Criminal networks exchange high-quality counterfeit currency for genuine notes, which facilitates money laundering," it said. (More)
