24 November, 2020

The Dhobi Ghat Chase

India's version of an anti-money laundering act is riddled with holes and doesn't cover serious issues

The Dhobi Ghat Chase
It didn't even concern most policymakers. That is, until 9/11 when terrorists attacked the commercial heart of the world's only superpower. Only then were the tremors of money laundering felt across the globe. So, just as day follows night, several nations quickly swung into action and put in place stringent anti-money laundering rules. The US did so under its new Patriot Act. And it nudged 40 other nations in Europe, West Asia and Southeast Asia to do the same. After delaying it for over three years, the Indian Parliament too okayed the anti-money laundering (AML) bill in late 2002.

Although the detailed rules under the AML Act have not been finalised, the Reserve Bank of India (RBI) is considering the suggestions made by a special team in the Enforcement Directorate. Unexpectedly, this political drama is translating into good news for the software industry. For, the US Patriot Act and similar ones in 40 countries expect banks to track all transactions and report any dubious ones to the authorities. This obviously requires specialised software.

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