Money laundering is the process of disguising the proceeds of crime and integrating it into the legitimate financial system. Before proceeds of crime are laundered, it is problematic for criminals to use the illicit money because they cannot explain where it came from and it is easier to trace it back to the crime.

The Artha Rin Adalat Ain, 2003 (Money Loan Court Act, 2003) is the primary legal instrument dealing with bank and non-bank financial institutions' (NBFI) loan defaulters, which prescribes mechanisms for the banks and financial institutions (FIs) to get reimbursed.