Varun Chandna - The Curious Case of Black Money and White Money: Exposing the Dirty Game of Money Laundering!

Notion Press

Old No. 38, New No. 6
McNichols Road, Chetpet
Chennai - 600 031

First Published by Notion Press 2017
Copyright Varun Chandna 2017
All Rights Reserved.

ISBN 978-1-946822-30-7

This book has been published with all reasonable efforts taken to make the material error-free after the consent of the author. No part of this book shall be used, reproduced in any manner whatsoever without written permission from the author, except in the case of brief quotations embodied in critical articles and reviews.

The Author of this book is solely responsible and liable for its content including but not limited to the views, representations, descriptions, statements, information, opinions and references [Content]. The Content of this book shall not constitute or be construed or deemed to reflect the opinion or expression of the Publisher or Editor. Neither the Publisher nor Editor endorse or approve the Content of this book or guarantee the reliability, accuracy or completeness of the Content published herein and do not make any representations or warranties of any kind, express or implied, including but not limited to the implied warranties of merchantability, fitness for a particular purpose. The Publisher and Editor shall not be liable whatsoever for any errors, omissions, whether such errors or omissions result from negligence, accident, or any other cause or claims for loss or damages of any kind, including without limitation, indirect or consequential loss or damage arising out of use, inability to use, or about the reliability, accuracy or sufficiency of the information contained in this book.

Dedicated to

All those who are fighting Money Laundering

in any and every way they can

In this Book, You will find How all of these

may be related with Money Laundering

Preface

Im tired of dreaming. Im into doing at the moment.

Bono

(Irish Singer and Writer)

hile I was preparing for my Chartered Accountancy Exams in early 2000s, some of my friends and relatives used to tell me that the main business of a Chartered Accountant (CA) is to manage the money of his High Net worth clients and convert their black money (Dirty Money or No. 2 money) into white (Clean Money or No. 1 Money). I had no real idea of this business and had doubts over their knowledge on black and white money too but their comments gave me an innocent kind of a proud feeling that like a pilot flies an aeroplane so intelligently pushing a lot of buttons up and down, I too would be doing some complex and sophisticated kind of a job.

However, in my entire CA curriculum, there was no subject that would teach me about this intricate job. After completing my CA, I went into the financial and banking sector jobs where trainings on legal compliances and Anti-Money Laundering were a regular affair but still they never focussed on how the launderers actually worked. While working with Bank of Tokyo-Mitsubishi UFJ, I used to think about generation and laundering of black money being a big menace to our country and a lot of statistics also suggested the size of this shadow economy to be no lesser than the real economy.

This made me even more interested in this topic and I decided to look out for the modus operandi that worked behind the scene in conversion of black money into white money and bring them out in public glare so that everybody understands it and there is nothing that is known only to launderers, government and a few professionals.

Knowing the ways in which money launderers abuse laws will also help people in understanding the complexity of these schemes which government agencies deal with and at the same time appreciate the steps government is taking in this direction.

As I studied the topic with greater interest, I thought of putting in some sincere efforts to help my fellow countrymen and people around this world tackle this menace of black money by spreading awareness and thought of coming out with a book on this topic. I believe if criminals fear that no matter how successful they are at the crime itself, there will still be problems in disposing off the loot, crime rate will definitely fall.

There are various people from different facets of society professionals as well as students who want to know how exactly the game of black to white is played. They may or may not be financial experts or finance enthusiasts but anyone who is interested in financial and economic activities should find this book useful.

Revenue and tax officials across the world would most likely be aware of most of the methods discussed here but a revisit to the basics is always beneficial and if they can effectively address all that, what is written here, Money Laundering is sure to get a big blow.

When I moved towards this subject in Feb 2016, there was a buzz around this black money word but there wasnt much that was done to prevent money laundering. However, things have changed significantly since then. Government of India has taken various measures to curb black money and money laundering. It had enacted a draconian Black Money Law in 2015 and then came out with an Income Disclosure Scheme in 2016 whereby it gave a window to black money holders to disclose their black money or else face prosecution.

Continuing the series, it demonetised high value currency notes of INR 500 and INR 1000 in 2016, extended the tax amnesty schemes and then legislated various Anti-Abuse measures in Union Budget of 2017 which shall become law effective from 01st April, 2017. It has since revised Tax Treaties with few Tax Haven countries also.

The above measures are not all; the Government is stead-fast on this issue of Black Money and is working on various facets related to it, be it Benami (Anonymous) Transaction Law, revisions in Income Tax Law, enacting Goods & Service Tax (GST) Law to replace existing Indirect Tax Laws, revisions in Corporate Law, Securities Law etc. Going through the methods stated in this book, readers will be able to evaluate the complexity embedded in the schemes and the changes made in various laws with respect to them.

Many of the measures taken by the government have already curbed and/or killed certain methods mentioned in this book while others may become redundant due to future legislations coming from government but they shall always be present here and relevant for academic purposes. I believe that besides garnering interest of various professionals like CAs, CSs, CMAs, MBAs and the students pursuing these courses, this book shall be relevant for bankers especially Credit Analysts, Relationship Managers and Trade Finance officials; Stock Brokers, Revenue Officials as well as public at large who is in anyways interested in Black Money and White Money.

Getting into the book: Few requests please

Please note that all the Money Laundering transactions are complex because if they are not devised that way, they would be easily identified. The Money Laundering game played between government and money launderers is like Tom and Jerry contest where whoever can think from others perspective will most likely win and therefore its marred with complexity and shrewdness. However, I have tried to keep it simple so that the idea easily creeps into everybodys mind. The amounts used are also small for understanding purposes. I have generally used INR 1 Million (or Mio) in most of my examples and INR 1 when read as USD 1 automatically becomes 70 times higher.