In the present scenario Money Laundering has become a matter of great concern across the globe. It not only causes serious threat to the social, economical, political system but also to security of any country as it encourages terrorism and other crimes against humankind. Introduction: Money Laundering is a processing of criminal earning to conceal its unlawful source of origin. In other words it is conversion of income generated by illegal means into lawful income. Generally money generated from following activities are processed further to alter its form and to hide its source of origin through a process of Money Laundering: i. Terrorism, ii. Illegal arms sales, iii. Financial crimes, iv. Scams, v. Smuggling, vi. Organized crimes, vii Drug trafficking , viii. Prostitution rings, ix. Embezzlement, x. Insider trading, xi. Bribery, xii Counterfeiting/fake currency, xiii Extortion and xii. Computer frauds, etc. Black money some times also routed through the recognized trust or charitable institutions because donation to such institution are eligible for rebate under Income tax legislation of many countries. Usually in this game ‘donation receipt’ issued by such institutions/trust shows larger amount against actual amount of donation. Money Laundering involves routing of funds generated from illegal activities to safe pool in order to disguise its source of origin and to convert it into bona-fide profits. As per an estimate of the International Monetary Fund, the aggregate size of money laundering in the world could be somewhere between 2% to 5% of the worlds gross domestic product. Process:- Most fundamentally, Money Laundering is inextricably linked to the underlying criminal activities that generate it. The essence, the laundering enables criminal activity to continue. The process of Money Laundering can be described as follows:- 1. Creation and Placement: The Launderer generates illegal gains/funds, introduces his illegal profits into the financial system, by breaking up large amounts of cash into less conspicuous smaller sums that are then deposited directly into bank account, or by purchasing a series of financial instruments that are later collected and deposited into accounts at another location. 2. Coating/Layering: Illegal gain/funds so generated then subjected to the series of small or complicated and scattered transactions or networks to obscure the point of origin. This involves conversion or movement of funds and also involves purchase and sale of series different financial instruments through out the globe. It is used to avoid audit check. 3. Absorption: As soon as link between money and criminal activities has become obscure, such funds again used by launderer in legitimate economy freely. In this way cycle remain in continuation. Anti-Money Laundering Initiatives The phenomenon of Money Laundering is not associated with any particular country. It s presence can experienced through out the world from developing to developed nation. Number of initiatives has been taken on the international level to combat the effect of Money Laundering. Some of the Global Initiatives are described below: a. Financial Action Task Force (FATF): The FATF was set up by the governments of G-7 countries (1989) to examine and suggest the countermeasure against Money Laundering. The FATF has recommended forty actions which can be adopted to check the Money Laundering. Few of them are described below: i. to treat the laundering of money as a criminal offence; ii. to confisticate the proceeds of crimes; iii. to promote the international cooperation against money laundering; etc. b. United Nations Conventions against Illicit Trafficking in Drugs and Psychotropic Substances It is popularly known as Vienna Conventions (1988) and it was first initiatives at international level to combat the ill effect of Money Laundering. The member countries agreed to declare the proceeds generated from drug trafficking as a serious criminal offence. c. Council of Europe Convention: The main object of this convention (1990) was to ensure global cooperation in connection with investigative assistance, search, seizure and confiscation of the proceeds of all types of criminality, such as drug offence, arms dealing, terrorist activities and like that. d. European Money laundering Directives: The main directives issued by the Council of European Communities (1991) was to require the financial institutions to implement the internal system to prevent money laundering and to report the transaction of suspicious nature and verify the identity of customers dealing in amount in excess of prescribed limit. e. Basle Committee’s Statement of Principle: This Committee laid down standard for the International Banking Institutions which includes principles related to the identification of customers (more popularly known as ‘know your customer’- KYC), avoiding suspicious transactions and periodic reporting with law enforcement agencies. f. Anti-Money Laundering Legislations: Number of countries has enforced the stringent Anti-money laundering legislation. For example in India ‘The Prevention of Money Laundering Act, 2002’ has come into force to combat Money Laundering. This act prescribed obligation of banking sector, financial institution and intermediaries in this regard. It also provides for punishment for dealing in ‘Black Money’, and provision related to the search and seizure and confiscation property involving ill-profit. Under American Legislation the Money Laundering Control Act of 1986 made money laundering a federal crime. The 'money laundering' legislation in the United Kingdom, under Sections 327 to 340 of the ‘Proceeds of Crime Act 2002’ (PoCA), is wide-ranging and encompasses mere possession of criminal or terrorist property as well as its acquisition, transfer, removal, use, conversion, concealment, or disguise g. Anti –Money Laundering Software’s (ALS): Now days banking institutions and financial institutions are using Information of Information technology to prevent Money Laundering. The ALS are designed in such a way that it will generate ‘alerts’ after automatic analysis as and when any transaction of suspicious nature enters into a system. h. Appointment of Money Laundering Reporting Officer (MLRO): Now days reputed and nationalized banks and authorised money changers dealing in foreign exchange are appointing MLRO having specialized and expert knowledge in dealing with Money Laundering issues. The responsibility of MLRO may include-detection of suspicious transaction, receiving disclosure related to suspicious transactions, reporting in time about suspicious transactions, training to other staff and preparing and issue of guidelines accordingly. Digest Money Laundering is a stern, highly sophisticated and global illegal activity. Across the world, banks have become a major target of Money Laundering operations and financial crime because they provide a variety of services and instruments that can be used to digest the proceeds of crimes. Banks and other financial institutions can protect themselves against Money Laundering by implementing an effective KYC Policy ‘knowing their customers, checking the source of Black -money, monitoring the conduct of accounts, and by learning to recognize suspicious/ irregular transactions. Money laundering weakens the economy and can cause serious threat the safety to social as well as political system of a country. Money Laundering also encourages Tax evasion and Tax Avoidance. In lump-sum Anti-Money Laundering (AML) guidelines should includes (according to Guidelines issued by the Government of India for Authorised Money Changers)- a. Identification of customers according to “Know Your Customer” norms, b. Recognition, handling and disclosure of suspicious transactions, c. Appointment of Money Laundering Reporting Officer(s), d. Maintenance of records, e. Audits of transactions Throughout the world, Money Laundering seems to support terrorism and continuity of other kind of organized crimes. International cooperation and consideration can only check-out this process.