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Money laundering
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Money laundering
•The word “laundry” literally means “cleaning”
•Metaphorically, money laundering refers to “cleaning on money”
• “Any financial transaction which generates an asset or a value as the result of an illegal act.”
Money laundering
Definition:
According to Swiss Bank:• Money laundering is a process
whereby the origin of funds generated by illegal means is concealed (drug trafficking, gun smuggling, corruption, etc.)
Money laundering includes:
Human trafficking
Arms smuggling
Tax evasion
Drug trafficking
Corrupt practices
TheftFraud
RobberyProstitution
Terrorism
1 •Placement
2 •Layering
3 •Integration
Money Laundering Process
Placement
This is the first step of the money-laundering process and the ultimate aim of this phase is to remove the cash from the location of acquisition so as to avoid detection from the authorities.Ex: Dividing large amount of money into less smaller terms that are deposited directly into different bank account.
Layering
Layering involves moving funds around the financial system, often in a complex serious of transactions to create confusion and complicate the paper trail..
Acct 1, Bank A
Acct 1, Bank D
Acct 1, Bank C
Acct 2, Bank B
Acct 2, Bank B
Acct X, Bank Y
Ex: Exchanging money in larger or smaller amount, or transferring funds to numerous accounts in one or more financial institutions.
Integration
The ultimate goal of money laundering process is integration. Once the funds are in the financial system and insulated through the layering stage, the integration stage is used to create the appearance of legality through additional transactions.
Ex: Purchase or resale of real estate, investment in securities etc.Or funnel such money into various dummy firms and get repaid through salaries, rent, leas on non- existing assets.
Organizations fighting for money laundering
Other global organizations fighting money laundering include:
• United Nations,• The International Monetary
Fund,• The World Bank
Thank You
