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Topic: Money laundering and its prevention.
6. Although India has signed information exchange agreements with various countries, but the chronic problem of tax evasion via tax havens resulting in money laundering remains unsolved. Examine. (250 words)
Difficulty level: Tough
Reference: Indian Express
Why the question:
International Consortium of Investigative Journalists (ICIJ) has leaked an offshore financial record, the most voluminous ever: as many as 12 million documents from 14 companies in offshore tax havens with details of ownership of 29,000 offshore companies and Trusts as a means of money laundering.
Directive word:
Examine – When asked to ‘Examine’, we must investigate the topic (content words) in detail, inspect it, investigate it and establish the key facts and issues related to the topic in question. While doing so we should explain why these facts and issues are important and their implications.
Key Demand of the question:
to write about the misuse of tax havens for money laundering.
Introduction:
Begin by mentioning the Pandora papers as a sequel to the leaks such as Panama and Paradise papers by ICIJ.
Body:
First, describe the findings of Pandora Papers – mention how the rich set up complex multi-layered trust structures for estate planning, in jurisdictions which are loosely regulated for tax purposes.
Next highlight the continuous quest for tax havens and new modes of money laundering by few elite sections of the society. Mention its impact.
Next, write about steps taken by the government and mechanism put in place to check it – write about its limitations.
Conclusion:
Conclude by mentioning the need for a robust, smart and collaborative efforts by tax authorities on a national front to outsmart such complicated and layered tax-evasive structures and prevent money laundering.
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