Abstract :
Despite the considerable media attention being given to the financial meltdown there
has been little attention on why this happened. This paper investigates into this
matter and takes a very unique point of view. Whenever we talk about this matter we
thought of liquidity crunch, sub prime crisis, high fiscal and trade deficit etc but we
never think about parallel economy and money laundering. Here are some facts
regarding this aspect: the amount of money laundered in the whole world is close to
$2.85 trillion per year. As per an estimate of International Monetary Fund the
aggregate size of this underground and illegitimate market is between 2 to 5 percent
of world’s gross domestic product. Criminals become wealthy enough to bribe
officials and ensure their continuing profitability. Bribed officials becomes a mere
puppet in their hands and act accordingly to their needs. Key media are controlled
which prevents any publicity. Terrorist financing, drug trafficking and the black
economy are nothing but the pitfalls of this growing menace. This is the biggest
industry in the whole world. It is bigger than oil or arms for that matter. Many
international money laundering rackets control the whole procedure. In this paper
we have presented how parallel economy is affecting various developed and
developing countries like U.S.A, U.K, Australia, India, China etc.
