COMBATING MONEY LAUNDERING THROUGH NGOS AND SHELL COMPANIES: ROLE OF INDIAN BANKING LAWS

AUTHOR – NISHANTH. S* & DR. VARUN SRIVASTAVA**

* STUDENT AT AMITY UNIVERSITY, NOIDA

** ASSISTANT PROFESSOR AT AMITY UNIVERSITY, NOIDA

BEST CITATION – NISHANTH. S & DR. VARUN SRIVASTAVA,COMBATING MONEY LAUNDERING THROUGH NGOS AND SHELL COMPANIES: ROLE OF INDIAN BANKING LAWS, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (7) OF 2026, PG. 386-393, APIS – 3920 – 0001 & ISSN – 2583-2344.

ABSTRACT

One of the most complex and continuous threats to the financial integrity of India is money laundering via Non-Governmental Organisations (NGOs) and shell companies. Although a strong statutory framework with the Prevention of Money laundering Act, 2002 (PMLA) as its backbone was established, the regulatory effectiveness is still compromised by the existence of gaps in enforcement, manifested in low rates of conviction, insufficient beneficial ownership disclosure, and lack of inter-agency coordination. This paper critically discusses the means by which NGOs and shell companies are used to launder money, the responsibilities of Indian banks as reporting entities, the difficulties in enforcing the rules, and uses three high-profile enforcement actions, the Vijay Mallya loan fraud, the K. Ponmudi disproportionate assets case, and the V. Senthil Balaji job scam, to demonstrate systemic weaknesses The paper ends with suggestions on a more robust risk-based strategy, incorporation of RegTech tools, and enhancement of data connectivity between the DARPAN portal and the Financial Intelligence Unit (FIU-IND) to bring the anti-money laundering system in India into compliance with Financial Action Task Force (FATF) standards.

Keywords: Money Laundering, PMLA, NGOs, Shell Companies, Indian Banking Law, FATF, Know Your Customer, Suspicious Transaction Reports, FIU-IND.