How money laundering can be a threat to India's internal security? Discuss some of the international agreements and steps taken by Indian government to address the issue of money laundering.

Money laundering is the process of creating the appearance that large amounts of money obtained from criminal activity, such as drug trafficking or terrorist activity, originated from a legitimate source. The money from the illicit activity is considered dirty, and the process “launders” the money to make it look clean.
Money laundering is a threat to India’s internal security

• Money laundering can give raise to parallel economy of unaccounted money. This parallel economy threatens the economic security of India.
• Money laundering can be used as a tool of resource mobilisation by insurgent groups, militants and Naxals who are threatening peace and security of India.
• Laundered money is used to fund political parties and for the funding the electoral expenses of the candidates. This together with belittling the legitimacy of democracy gives thrust to the criminalisation of politics.
• Laundered money is used to fund separatist activities in Kashmir and insurgent groups in north east.
• Money laundering distorts the open market and allows a section to manipulate the market economy to satisfy vested interests. This restricts the opportunity of those in the lower strata to break the glass ceiling.
• Money laundered is used to fund NGOs and other civil society groups to propagate an agenda which are detrimental to the interests of the society.

International agreements to fight Money laundering
Financial action task force (FATF)
FATF was established in the G8 summit to counter money laundering and terror funding.
EGMOUNT group
It is an informal network of financial intelligence units (FIUs) of different countries. The group collaborates and cooperates in efforts to fight money laundering and terror financing.
Steps taken by government to address money laundering

• Government has brought in amendments to prevention of money laundering act to make the law more comprehensive.
• The Financial intelligence Unit (FIU) operates in the legal framework established by the PMLA. FIU performs the basic functions of receipt, analysis and dissemination of information in accordance with the international standards set up by the Financial Action Task Force (FATF) and Egmont Group of FIUs.
• KYC details have been mandated to prevent banks from being used, intentionally or unintentionally, by criminal elements for money laundering or terrorist financing activities. 
• Government is cracking down on shell companies to prevent money laundering.

Money laundering cannot be fought in isolation. India needs to fight money laundering in broader sense in an integrated way by countering black money, drug trafficking, terrorism and other anti social activities.