Money Laundering

Money laundering is a process used by offenders who attempt to conceal the true origin and ownership of the proceeds; these proceeds are results of criminal activities. It allows them to maintain control over the proceeds and provide a legitimate cover for their source of income.

The laundering of the proceeds that result from criminal activity is done through the financial system. The people who are involved in such an action exploit the facilities of the financial institutions of the world. Such an action is done easily under these conditions of free movement of capital. Banks involved in such actions risk to lose their market reputation.

Money laundering is accomplished in three stages, involving numerous transactions of the launderers. Here they are:

  1. Placement – It means a physical disposal of cash proceeds got from illegal activity. Illegal activities like drug trafficking, extortion, generate very volumes of money. People involved in these activities cannot explain the origin and source of these funds to the authorities. There is a constant fear of getting caught. So the immediate requirement is to send this money to a different location using all available means. This stage is characterized by facilitating the process of inducting the criminal money into the legal financial system. Normally, this is done by opening up bank accounts in the names of non-existent people or commercial organizations and depositing the money.
  2. Layering – It implies a separation of illicit proceeds from their source; there are created complex layers of financial transactions meant to disguise the audit trail and they assure anonymity.
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Deciding on the Right Credit Card

How much is the joining fee and the annual fee?

Generally, a credit card with a higher annual fee enjoys more benefits like higher credit limit, higher accident insurance cover, accessibility to airport lounges, travel discounts etc. OF at least the used to be the case. With cutthroat competition between the card issuing banks, players are ready to waive joining fees and also one-year membership fees for anyone. Grab these offers, or negotiate this for yourself.

How much is the Add-on card fee?

If you are interested in buying add-on cards for your children, spouse or friend, ask for the add-on card fee. Remember that you will be settling the bills on the add-on card that you so touchingly gift to someone dear to you – the statement will come to you, and the responsibility for payment is yours (as far as the credit card company is concerned)

What is the interest rate?

This is actually a question that you should be asking fairly soon in the discussion. Remember, while the up front one off fees are bread and butter for the credit card company, this is the jam! If you are the sort who forgets to pay on time, or likes to live it up and live off credit, the interest rate would be of paramount importance. Most credit card companies charge anywhere between 2% to 3 % per month. (Read a whopping 35% to 43% per year). That’s where they make their gravy, and that’s where you pay! It is always advisable to pay off the entire amount on due date, or, if you have a large bank balance, look for card companies that provide the transfer balance facility.… Read the rest

Credit Card Industry in India

The credit card industry in India has registered an encouraging growth in recent times, but the usage pattern of credit cards remains a point of concern, those in the industry say. Seven years back, India had a base of around five lakh credit cards. There has been a seven-fold increase, with the number of cardholders touching over 38 lakh. These figures point towards the fact that the credit card industry in India is growing at a brisk annual rate of 30 per cent and is expected to grow at a similar rate in the coming years. This fortifies the view that conservative purchasing ideas are giving way to the big in-thing. But it is the usability that raises doubts.

According to a survey by the Credit Card & Management Consultancy (CCMC), 71 per cent of first time credit card applicants in the country have expressed the need for advice on appropriate card selection despite the plethora of cards available in the market. Through this survey it has come to realize a long felt need of potential and existing cardholders for advice on suitable selection of a credit cards. The whole idea behind the introduction of the credit cards was to increase the purchasing capacity of the cardholder. With this in mind, the foreign banks launched a credit card blitzkrieg on the Indian customer.

The innovations have already begun to show their effect. The Standard Chartered Bank has seen its credit card base shoot up after the launch of its Global Rupee Card in March last year.… Read the rest

What Is Plastic Money?

A plastic money card is a thin card that contains identification information such as a signature or picture, and authorizes the card holder to charge purchases or services to the card holder’s account. Today, the information on the card is read by automated teller machines (ATMs), banks, and the internet.

It all started in the 1920s, when individual companies (such as oil companies and hotels) issued these “plastic money cards” for purchases made at their businesses. However, these cards could not be used outside of the company.

In the 1950s a “universal card” was introduced by Diners Club, INC. This was when credit cards were made. These cards allowed the card holders to use the cards in various locations and businesses. The way the cards worked was that there were annual fees, and depending on the plan, the card holders were billed either monthly or yearly.

Later on the “bank credit card system” was introduced. Under this system, the bank credits the account of the merchant at each sale and bills to the card holder at the end of the billing period to account for the sale. The card holder, in turn, pays the bank either the entire balance or in monthly installments with interest. This is the system that all credit cards are under today. Now there are three different types of cards: credit cards, debit cards, and prepaid cards.

Credit cards are cards that offer customers and businesses short-term lines of credit. This allows for the customer to pay for unexpected/large expenses without actually paying for the product that second.… Read the rest

Current Situation of Credit Card Business

The previous (current) financial crisis has severe effects on the business of companies in the credit card business. For a long time, the credit card business has been regarded as one of the most profitable businesses in the financial services industry. MasterCard was one of the most successful companies with its business model differing in one important point from its competitors. Most of the companies in the credit card business issue their cards on their own (including market leader American Express), whereas MasterCard and its main competitor VISA operate through a franchise system which allows its partners (banks) to issue cards of MasterCard. The company is therefore not a direct business partner of cardholders but with the banks which have the right to issue its cards. MasterCard itself states that it is more a franchisor than an issuer of cards. It is therefore not directly exposed to the possibility of defaulting borrowers.

The last 10 to 15 years saw rapid growth rates of revenues of credit card companies. Aggressive advertising which was intended to outline the advantages of payment with credit cards against traditional payment forms like cash and check (especially in the USA) led to big rises in revenues and processed transactions. MasterCard increased the number of its total transactions from $ 18.7 billion in 2007 to almost $ 21 billion in 2008, which represents a rise of 10.56%. The increasing importance of this payment method was furthermore supported by the increasing number of outlets worldwide which accept credit cards.… Read the rest

Some Facts Regarding Credit Cards

Know the Credit Card Well Before Applying for One

Owning credit cards are quite handy. You need not bring cash but still able to buy anything you want since almost all establishments, including those selling online, accept all types of credit cards. In fact, even if you do not have money yet, you can already make any purchase that may be heavily needed. It therefore provides safety and an answer to emergency needs.

However, people who are making use of credit cards should have discipline and be responsible enough not to spend beyond their means or end up being burdened with tons of debt. Those who are uncontrollable can even end up facing bankruptcy. Always keep in mind that credit card interests can be costly once compounded. If you have several credit cards and you have no control with your spending, chances are you will not be able to pay them all properly and credit card interest can hurt you badly.

There are actually some ways to make credit card maintenance not as costly as it is. With the huge number of credit cards being offered by different banks and other financial institutions, you can afford to choose the best credit card depending on your style of spending.

First thing that can hurt you when acquiring a credit card is the annual fee. While many of these card companies will require cardholders to pay an annual fee, there are also plenty of credit cards out there which offer zero annual fee.… Read the rest