While the Indian banks are willing to do their part to curb the illegal practice of money laundering, they face various challenges in their attempts to comply with the requirements of the laws and provisions in this regard.

It is a universally accepted truth that the practice of money laundering has a corrosive effect on a country's economy. It not only distorts business decisions, but also increases the risk of bank failures, thereby taking the control of economic policy away from the government. In a nutshell, it does everything to harm a country's overall economic reputation. It is much like a parallel underground economy, undetected and unaccountable. Like the banks abroad, the Indian banks are also faced with the very critical issue of curbing the illegal practice of money laundering.

As a natural consequence of globalization and India's obvious growth in cross-border business, our banks and other financial institutions are being exposed to the threat of money laundering now more than ever before. Many steps have been taken in India to support the global anti-money laundering efforts. The Prevention of Money Laundering Act, 2002 was enacted by the Indian parliament and detailed rules were framed thereunder. Under the provisions of the said Act, the Financial Intelligence Unit - India (FIU-IND) was set up as an apex body for coordinating India's anti-money laundering efforts. This Act also obligates banks, financial institutions and other intermediaries to maintain a record of all transactions along with their nature and value. They are also under an obligation to verify and maintain records on the identity of all its clients in a manner as prescribed.

The Analyst Magazine, Money Laundering, Financial Intelligence, Know Your Customer, KYC, Reserve Bank of India, RBI,economic Reputation, Financial Tterrorism, International Money Transfer, IMT, Terrorist Organizations, Financial Intelligence Unit - India, FIU-IND.