A new era of globalization has emerged, and it is shrinking the world and shaping domestic politics and international relationships[footnoteRef:1]. Globalization involves the international integration of capital, technology, and information in a manner resulting in a single global market and, to some degree, a global village.[footnoteRef:2] Globalization has turned the international financial system into a money launderers dream, siphoning off billions of dollars a year from economies around the world and extending the reach of organized crime. This unintended consequence of globalization presents a serious challenge to law enforcement agencies and financial regulators. In 21st century, economy is largely governed by advances made in information and communication technologies (ICT). Such technological advances make it easier to invest into developing countries. Developing countries economies are growing at faster pace. Developed economies as well as developing economies continue to face challenges that come with economical advancements such as regulation of money flow, financial crimes, and abuse of financial systems. Among these challenges include crimes related to the information economy which is seen as an increasing source of concern within the international financial community. The proceeds from these crimes are bundled to give it a legal appearance and this process is known as "Money Laundering". A concise working definition was adopted by Interpol General Secretariat Assembly in 1995, which definesmoney launderingas:Any act or attempted act to conceal or disguise the identity of illegally obtained proceeds so that they appear to have originated from legitimate sources.[footnoteRef:3] [1: Thomas L. Friedman, The Lexus and the Olive Tree: Understanding Globalization(New York, NY: Farrar, Straus, Giroux,1999).] [2: Ibid] [3: Arya, Ashok,Money Laundering: Combating the Menace in Global and Indian Context, Taxmanns, November 2003.]

It is a strong belief that economic crimes, including money laundering constitute a serious threat to national economies, and respective governments. Economic crimes can have a devastating effect on a national economy since potential victims of such crimes are far more numerous than those in other forms of crime. Economic crimes also have the potential of adversely affecting people, who do not, prima-facie, seem to be the victims of the crime. For example, tax evasion results in loss of government revenue, thus affecting the potential of the government to spend on development schemes thereby affecting a large section of the population who could have benefited from such government expenditure. A company fraud not only results in cheating of the people who have invested in that company but may also adversely impact investors confidence thereby affecting the growth of the economy. There have also been instances of manipulation of stock markets resulting in the loss of a substantial amount of assets of the small investors. Corruption not only results in loss of citizens rights but also has the potential of ruining the moral fabric of the society. Therefore, economic crimes constitute a serious threat to the national economy and system of governance.

The concept of money laundering originated in the U.S.A. It started with the attempt to disguise the ill-gotten wealth, obtained fromtrading in alcoholic beverages. American mobster Meyer Lansky transferred funds from small casinos to overseas accounts, especially Swiss banks, the term used for such activity is, capital flight. The first reference to the term, Money Laundering itself appeared during the Watergate scandal. Here illegal funds obtained for the president re-election were moved to Mexico and then brought back through a company to Miami. In this context the British newspaper coined the term LaunderingThe negative economic effects of money laundering on economic development aredifficult to quantify, yet it is clear that such activity damages the financial-sector institutions thatare critical to economic growth, reduces productivity in the economy's real sector by divertingresources and encouraging crime and corruption, which slow economic growth, and can distortthe economy's external sectorinternational trade and capital flowsto the detriment of longtermeconomic development. Developing countries' strategies to establish offshore financialcenters (OFCs) as vehicles for economic development are also impaired by significant moneylaunderingactivity through OFC channels. Effective anti-money-laundering policies, on the otherhand, reinforce a variety of other good-governance policies that help sustain economicdevelopment, particularly through the strengthening of the financial sector. Money laundering also facilitates crime and corruption within developing economies, which is antithetical to sustainable economic growth. Just as an efficient financial sector is a key "input" to other productive processes in a developing economysuch as manufacturingan efficient money-laundering channel is a key "input" to crime because the financial proceeds from crime are less valuable to the criminal (in a sense, an "unfinished product") than are laundered funds.Link: https://www.unodc.org/tldb/pdf/Asian-bank-guide.pdf