Black Money

The term covers two sources. One is legal activity whose income is hidden from the tax authority, such as cash sales that are never recorded. The other is crime, such as bribery, fraud or smuggling, where the proceeds could never be declared. Holders try to use the money without drawing attention: they buy property in other names, move cash abroad, mix it with a business's takings or route it through shell companies. At that point it becomes a money laundering problem as well as a tax one. Governments respond with disclosure schemes, cash limits, property registers and information exchange with other countries. The phrase is informal, and laws prefer terms like undisclosed income or proceeds of crime. Banks watch for large cash deposits, round-number transactions and property purchases that do not fit a customer's profile. Left undetected, hidden money shrinks the tax collected and can pay for further crime.

A jewellery wholesaler records only half of his cash sales and keeps the rest in a safe. He later deposits the cash in small amounts across several relatives' accounts. The bank notices the pattern, finds no matching income in his filed returns and raises a suspicious transaction report.