DATA PROTECTION &ANTI-MONEY LAUNDERING – A COMPLEX RELATIONSHIP

-Shubhangi Arde

Introduction 

With the rapid growth in the age of technology, everyone is open to surveillance and has lost their right to privacy from the government and all unknown agencies. In this no privacy era many unknown threats are coming at us at a faster rate. Right to Privacy is been defined in different aspects with the change in time. In the digital era we are facing privacy threats from unknown agencies situated at different corners of the world, where the right to privacy is been infringed in various aspects.

One of the upcoming threat waiting for us is the Anti- Money Laundering and Data Protection. Through this research paper the attempt is made to build a complex relationship between Data Protection and Anti-Money Laundering. Money Laundering Activities can be tracked down as far as thousand years back. Money Laundering is the method of illegally hiding the origin of money obtained from activities like gambling, corruption or drug-trafficking or any other activities where the source is unknown and utilizing that money by converting it in a legitimate way. It is an organized crime defined in different ways in different courses of the world.

In the earlier times the concept of money laundering was applicable only to the financial transactions for organized crime. Today, International organizations, multinational companies and fake institutions often expand it. In European Countries money laundering activities does not even need money transactions but any economic good. It is observed that money laundering is committed by private individuals, drug-dealers, businessmen, mafia members of criminal organizations or corrupt officials.

Hence in simple terms Money Laundering can be defined as the illegal process of making of large amount of money generated by criminal activity or converting black money into white money without paying taxes to the government. However this process is abused by some agencies to keep money without any evidence of any criminal activities and to make use of it to supplement their annual budgets. Money laundering activities can be traced through several forms like Cash- Intensive business, Bulk- cash smuggling, Round- tripping, Gambling, open job market place such as freelancer.com.

         Role of Financial Institutions in Anti-Money Laundering Activities.

An effective Anti- Money Laundering programme needs a jurisdictions to crimes related to money laundering to make relevant regulators to give tools to and powers to police for investigations throughout the world to identify the source of money through financial institutions to report suspicious activities and risk based controls of their customers. To control money laundering activities strict background checks are required to strive against money launderers escape by through company structures and complex ownership.

Today, most of the financial institutions around the world and many non-financial institutions are required to report and identify transactions of suspicious nature to the intelligence bureau for instance, A bank verifies the customers identity through KYC, i.e. process of Know Your Customer, which means knowing the complete information of the customer and to tract financial background of the customer.

       Privacy Concerns related to Anti-Money Laundering Activities

Privacy means the capability of a person or a group of persons to hide information from others as well as to seclude themselves.²⁹The Right to Privacy is recognized internationally as Human Rights under Article 12 of the UDHR³⁰ which provides everyone has the right to not to get disturbed or interfered with his privacy, family, correspondence or his personal information. Indian Judiciary and many jurists have spread ink to define Right to Privacy and its limitations. After Independence many cases were filed before Indian courts for the protection of Right to Privacy.

In recent times with the digitalization, the infringements of right to privacy concerns are increasing at an alarming rate. Our current Prime Minister Shri Narendra Modi has seen a dream of Digital India and have launched the same in 2016. Since then almost everyone is moving forward towards digital world. No doubt that Digital India campaigns is a big success for the last 7 years life has become easier. Everything is available at one touch. But at the same time it lacks in the protection laws and leaking the personal data of people and inviting unknown agencies through world.

In 2016 after demonetization, all the citizens were asked and promoted to shift to online banking and insisted to link the Bank accounts with financial tools like Gpay, Paytm, Phonepay, Amazon Money, Whatsapp Money and so on. While all these facilities were very convenient and time saving for consumers but by linking the bank accounts and accepting terms and conditions with Institutions is more risky without any legislation.

Anti- Money Laundering activities and Data Protection have a complex relationship, as all the facilities are available at our tip of the mobile phone, the personal information of the personal is also available to all those agencies worldwide. Hence we all are at a very high risk of unknown threats. To convert the black money into white money has become easy for these agencies as they have a good number of data available with them. Therefore it is high time to have data protection legislation in India like all the European countries, The Data Protection Bill is pending in the parliament for last five years. All the government, non-government financial institutions are awaiting for this Bill, as many of these activities would be restricted.

One of the Major concerns for anti money laundering and data protection is funding of the terrorist activities. The main problem is to know the source of money to criminals where they do not rely on one specific financial institution for their financial needs; criminals usually diversify multiple institutions and jurisdictions across world. And the use of fake corporate vehicles is extensive as it provides criminals the anonymous identity they need. Worldwide efforts have taken thecorporate veil of privacy in some jurisdictions via introducing laws requiring greater transparency of corporate controller and Ultimate Beneficial Owners (UBOs). This conflict of privacy versus information sharing with terrorist and criminals played out in private information-sharing threats.

Data Privacy breach and its associated risk 

The state processes personal data for multiple of purposes, and is arguably its largest processor. In India, the state uses personal data for purposes such as the targeted delivery of social welfare benefits, effective planning and implementation of government schemes, counter-terrorism operations, etc. Such collection and use of data is usually backed by law, though in the context of counter-terrorism and intelligence gathering, it appears not to be the case. Across India, both central and state government institutions are launching platforms to digitize records and offer online services to citizens. Establishing such platforms is leading to a more comprehensive digital trail on individuals. Government initiative such as parivahan sewa, Digi Locker, Aadhar, IRCTS, Bharat Interface for Money (BHIM), TARKASH by Ahmedabad city Police . Personal data is quite valuable and will continue to be collected, stored and processed on a large scale in India. While technology and business models using personal data have evolved significantly, the regulations and ethics around data usage and privacy are still evolving in India.92.

Personal data is used by big markets to support personalized services. The government uses it to provide various public services in an efficient manner. The data scientists do the task of designing and developing new protocols and algorithms. Users get benefit via personalized consumer experiences. Data are turning to be the pillar of the big market.

The terms information and data are both used in the context of informational privacy and data protection. The word has specific connotations in the fields of computer science and information technology. Information on the other hand simply means facts about something or someone. Under Section 2(1) (v) of the IT Act information includes data, text, images, sound, voice, codes, computer programmes, software and databases or micro-film or computer generated micro-fiche.

Big Data is usually characterized by Vs, namely volume as in massive datasets, velocity which relates to real time data, and variety‘which relates to different sources of data. Other technological developments such as artificial intelligence, machine learning, the Internet of Things are all part of the Big Data ecosystem and their use is becoming increasingly common place While Big Data does not have a precise definition it can be understood as essentially involving gathering large quantities of data and applying innovative technology such as predictive analysis to them to extract knowledge.

The biggest challenge in regulating emerging technologies such as Big Data, artificial intelligence and the Internet of Things, lies in the fact that they may operate outside the framework of traditional privacy principles. Big Data involves the processing of large data sets, usually the source of such data may not be directly from the individual, and consent may not be as relevant. Further, data may be generated as a by-product of a transaction or obtained by a service provider in return for a free service such as free email accounts, social networks etc. or obtained as a consequence of accessing a service such as use of GPS navigation, and it may not be possible to specify the purpose for which personal data is collected at the time of collection. The advent of such technologies has also expanded the very definition of personal data.

Hence Personal Data Protection is the need of an hour, as personal data has become the new business strategy of the market. In the last few years worldwide concepts of richest man of the world has changed. Bill Clinton was said to be the richest person in the world, depending upon his assets and bank balance but in today’s world the Elon Musk is known to be the richest man of the world as he possess the maximum data of the world. Population is always treated as the asset of the country but then personal data of the people without their consent is said to be negative asset of any of these organizations.

Privacy no doubt implies protection of personal rights liberty and thus if it is disturbed it should have been with reasons. With the development of telecommunications, internet, e-governance, e- commerce and rapid growth in the software right to the personal data protection is much needed. Although information and telecommunication technologies have enhanced the capacities to collect, process store and communication information, it is these very capacities of technology which makes us weak to intrusions of our privacy.

Further our personal data available on our personal devises like Computers, Mobile Phone, Social media accounts could compromise us in unpleasant ways- the consequences like Financial loss, online stalking, or using our personal details for illegal activities. Moreover in the age of cloud computing when our personal data like our chats, call logs, bank accounts, personal profiles our online communications is available on distant servers of the worldwide multinational companies makes it difficult to trace the source of culprit behind the infringement of personal data.

Although there are technological measures through which these unwanted risks could be reduced, it is also important to have a strong legislation in place which lays emphasis on protection of personal data and privacy. Besides the urgent need of protection of personal data, improper attention to data protection practices and economic cost to implement anti money laundering laws, may cost to individuals privacy rights. In June 2011, the data protection advisory committee to the European Union issues a report on data protection issues related to the prevention of money laundering and terrorist financing, which identified numerous transgressions against the established legal framework on privacy and data protection. The report made recommendations on how to deal with money laundering and terrorist sponsorship in ways that protects personal privacy rights and data protection laws. In the United States, groups such as the American Civil Liberties Union have expressed concern that money laundering rules require banks to report on their own customers, essentially conscripting private businesses “into agents of the surveillance state”

Many countries are obligated by various international instruments and standards, such as the 1988 United Nations Convention Against Illicit traffic in Narcotic Drugs and Psychotropic Substances, the 2000 Convention against Transnational Organized Crime, the 2003 United Nations Convention against Corruption, and the recommendations of the 1989 Financial Action Task Force on Money Laundering (FATF) to enact and enforce money laundering laws in an effortto stop narcotics trafficking, international organized crime, and corruption. Mexico, which has faced a significant increase in violent crime, established anti-money laundering controls in 2013 to curb the underlying crime issue.