The Credit Life of the Criminal: Money Laundering via Credit Facilities in India

In India, access to credit facilities is a lifeline for individuals and businesses, helping them fulfil dreams, manage liquidity challenges, and expand their operations. However, this article delves into a darker aspect of this financial ecosystem, as we explore how criminals exploit credit facilities to launder their ill-gotten gains.

Criminals Exploiting Credit Facilities

1. Repaying Loans with Ill-Gotten Funds

   - Criminals approach financial institutions for loans and repay them using unlawfully obtained funds.

   - Personal and corporate loans, as well as mortgages, serve as a cover to legitimize money from illegal sources.

2. The "Loan-Back" Scheme

   - Criminals create loan agreements with third parties, often offshore corporations they control.

- This illusion of legitimate funds is maintained through scheduled payments on these loans, reinforcing the deception.

3. Alluring Low-Interest Rates

   - Criminals offer loans and mortgages at rates below industry standards, often driving competitors out of business.

   - Customers unknowingly legitimize the criminals' operations by repaying loans with "clean" money.

Conclusion

To ensure a safer credit ecosystem in India, it is imperative for financial institutions to be vigilant against money laundering. A concerted effort involving due diligence technology, employee training, and strong collaborations with law enforcement can thwart increasingly sophisticated money launderers, thus preventing criminal activity from thriving.