Question

Which of the following could potentially be used for money laundering?

1. P Notes
2. Tobin tax
3. Roundtripping
4. Shell companies

Which of the above statements are correct

• A. 1 and 3
• B. 1 and 2
• C. 1, 3 and 4
• D. 1,2, 3 and 4

Answer 1

The correct option is C 1, 3 and 4

Participatory notes also referred to as P-Notes, or PNs, are financial instruments required by investors or hedge funds to invest in Indian securities without having to register with the Securities and Exchange Board of India (SEBI).Participatory notes allow non-registered investors to invest in the Indian market. Participatory notes are popular investments due to the investor remaining anonymous and this forms the major concern wrt P-Notes.

Round tripping refers to money that leaves the country through various channels and makes its way back into the country often as foreign investment. This mostly involves black money and is allegedly often used for stock price manipulation.

Shell companies are typically corporate entities which do not have any active business operations or significant assets in their possession. The government views them with suspicion as some of them could be used for money laundering, tax evasion and other illegal activities.