MONEY LAUNDERING

BY

ANUSHA.D

VEKATA KIRAN

What is Money Laundering?

“The process used to disguise the source of money or assets derived from criminal activity”

Include:

Drug trafficking

Extortion

Corruption

Fraud

Why do they laundry?

Criminals want to:

Avoid prosecution

Increase profits

Avoid seizure of accumulated wealth

Appear legitimate

Tax evasion

They are trying to conceal the origin of the cash

Common money laundering techniques

Bank complicity

Asset purchases with bulk cash

Postal money orders

Credit cards

Gambling in casinos

Refining

Legal frame work so as to curb Money Laundering:

In response to mounting concern over money laundering, the Financial Action Task Force on money laundering (FATF) was established by the G-7 Summit in Paris in 1989 to develop a co-ordinated international response.

One of the first tasks of the FATF was to develop Recommendations, 40 in all, which set out the measures national governments should take to implement effective anti-money laundering programmes.

IMF for example, stated in 1996 that the aggregate size of money laundering in the world could be somewhere between two and five percent of the world’s gross domestic product.

Money laundering affecting Business

If funds from criminal activity can be easily processed through a particular institution – either because its employees or directors have been bribed or because the institution turns a blind eye to the criminal nature of such funds – the institution could be drawn into active complicity with criminals and become part of the criminal network itself.

Evidence of such complicity will have a damaging effect on the attitudes of other financial intermediaries and of regulatory authorities, as well as ordinary customers.

Money laundering and International Law:

UN Convention against illicit trafficking of narcotics and psychotropic substances passed in 1988 in Vienna

Convention on laundering, search and confiscation of criminally gained profit dated November 8, 1990, Strasbourg,

Directive for prevention of use of financial system for money laundering in 1991,

UN Convention against transnational organized crime passed on December 12-15, 2000, in Palermo.

These international acts establish a legal basis for governing incriminated behavior related to money laundering in national criminal legislation and regulation of criminal sanctions.

Activities responsible for money laundering:

Conversion or transfer of property knowing that the property is the result of a committed crime in order to conceal the illicit origin of the property;

Assistance to any person involved in committing of such a crime in order to avoid legal consequences of these activities;

Hiding or concealing the true nature, source, location, availability and movement of derived ownership rights or property knowing that the property is the result of a committed crime;

Gaining, possession or use of goods or things or values knowing at the time of their receipt that they are the result of illicit trafficking of narcotics;

Collusion in order to commit, attempt, assist, instigate, facilitate or advise to commit crime of trafficking of narcotics including money laundering.

Article 6 of the EU Convention 1990:

It defines the concept and characteristics of the crime of money laundering which consists of intentional undertaking of one or more of the following activities:

Conversion or transfer of property knowing that the property is the result of a committed crime in order to conceal or present falsely the origin of property or assisting an individual involved in committing the mentioned crime in order to avoid legal consequences for their acts;

Concealing or false representation of legal nature, source, location, use, movement of rights or property in relation to the property knowing that the property is the result of a committed crime;

Gaining, possession or use of property knowing at the time of receipt that it is the result of criminal activities;

Participation, collusion or conspiracy in order to commit, try to commit and assist, instigate or facilitate and advise any crime.

Repression of money laundering was also included in the UN Convention against transnational organized crime with two additional protocols: the Protocol about the problems of undertaking efficient measures for prevention and for prevention, repression and punishment of people trafficking, especially women and children and the Protocol against smuggling of migrants by land, sea or air..

Anti-Money Laundering (AML):

The Bank Secrecy Act (Currency and Foreign Transactions Reporting Act of 1970);

The Money Laundering Control Act of 1986

The Anti-Drug Abuse Act of 1988; Section 2532 of the Crime Control Act of 1990; Section 206 of the Federal Deposit Insurance Corporation Improvement Act of 1991

The Annunzio-Wylie Anti-Money Laundering Act (Title XV of the Housing and Community Development Act of 1992);

The Money Laundering Suppression Act of 1994 (Title IV of the Riegle-Neal Community Development and Regulatory Improvement Act of 1994)

The Money Laundering and Financial Crimes Strategy Act of 1998

The USA PATRIOT Act (Title III, International Money Laundering Abatement and Anti-Terrorist Financing Act of 2001).

Conclusion In order to control the abuse of financial centers by

trans-national criminal operators, preventive and punitive measures are clearly necessary.

Moreover, the stability of financial markets has to be secured from the damage that could result through systemic misuse.

This latter aim has meant that international bodies such as the Basel Committee, the FSF and the FATF amongst others, are continually developing details for a harmonized approach aimed at preventing “money laundering”.

It may be suggested that the substantive mix of AML rules even if their historic evolution is different in each of the countries examined reflects tacit, but at the same time.