From Black Money to Money Laundering!

Going for 'Legal' Money Laundering
Anindya Bhattacharya

Almost 22 days have passed after the Grand Announcement from Modi! A section of people are hopeful and a large one confused. As days pass the confusion is on the rise. Mr Modi announced that Rs 500 and Rs 1000 notes would be de-monetized to combat fake currencies and unearth black money (rather disabling). Public at large thought it to be a wise decision because black money is a reality in our country and made havoc to our economy. Mr Modi and his team embarked on this public perception and launched a massive operation which appears to be an onslaught on the ‘black money’ but in reality something else has been pursued.

First of all, let us raise this question – was it really a de-monetisation programme? De-monetisation means ending of certain currencies which happened in 1978 in regard to Rs 1000, Rs 5000 and Rs 10000 notes. But here it was not like that. 85% of the currencies cannot be demonetized at a single strike. Rather, it was a kind of partial currency replacement programme which happens occasionally but done with a great hype this time. Rs 500 and Rs 1000 notes were withdrawn but with replacement by new Rs 500 and Rs 2000 notes. Here the new element is – it is partial. Deliberately, the amount of notes withdrawn would never be replaced by the same quantum. Here lies the trick and the sole motive of Mr Modi. He wants to forcibly impose the digital transaction system upon the people of our country by making an artificial shortage of currencies. Moreover, Rs 2000 note is not hand worthy for retail purchases due to want of return. But, before coming to this point, let us navigate through some important concepts.

One of such concept is that of ‘black money’. What is black money? Black money is a kind of income (may be obtained through labour or by position as bribe, even be through transaction without proper documents et al) not declared for tax purposes of any sort. This income is stashed either in form of cash or held as property or bullion, jewelry, shares etc. Yes, there are huge amount of black money in different forms across the country and to unearth it there are innumerable government agencies like IT, ED, EW, SEBI, CBI bla bla bla with their intelligence wings. It is their duty and the government’s will to make this agencies run after such black money and nab them. But these agencies, as we have seen over the years, are selective in nabbing the culprits depending on the government’s prerogative. In a way, they are mostly disabled at the whims of the government. So, it is clear that the government is not at all interested to pinch these culprits unless they have any ‘misunderstanding’ with the power at the helm of affairs. These culprits, in fact, sponsor the political parties in power. Thus, in the recent backdrop of drive for de-monetisation, the obvious question arises - how this drive is related to get hold of black money and the black marketers? The black marketers, who have such amount of undisclosed money in form of cash or kind, are also aware of the avenues to go scot-free with an amount of risk-premium which they are habituated with. The point is, the government never intended to arrest the black money by initiating this drive. It only made an artificial crisis in monetary market by withdrawing 85% of currencies and initiated a process of digitalizing the system to push the entire economy at the foot of the corporates to destroy our unorganized small economy which constitutes the major backbone of the Indian economy.

Here comes the other concept of this story – Money Laundering. Corporates do not hold their wealth in classical mode of black money but launder money as a global player in an apparently ‘legal’ way.  What is money laundering? It is a transformation of proceeds earned by manipulating the accounting process (nowadays ‘creative accounting’ is a fashionable term) and government policy into legitimate wealth. Adani and Ambani groups are a glaring example of this kind of money laundering. Some term it as ‘financial thoughtcrime’. It has three layers – (i) placement (ii) layering and (iii) integration. The ‘placement’ implies, introducing the cash as 'earned' into the financial system. In digital system, this layer is obsolete. The ‘layering’ works out to be carrying complex transactions to camouflage and the ‘integration’ is final acquiring of wealth. In the global context, due to existence of tax havens and the flexibility of economic transaction world-wide, the corporates run their show in a global mode to accommodate and dispose their acquired wealth in different countries in various manners. If they can digitalise the entire economy, even to a large extent of it, then money laundering would be just an art of their finger tip.

The people have been made fools by Mr Modi in the name of arresting black money. His surgical strike on our people from 8^th November 2016 midnight is aimed at corporatizing the entire economy with digitalizing of monetary system implying a step towards developing a full-fledged ‘legal’ money laundering system for the corporates. People, in general, bear anger on black money hoarders. Modi has just utilized this sentiment to the fullest extent in favour of the corporates. Finally, black marketing will be converted into money laundering and the black marketers will be money launderers. This is what Modi desires and corporates too!