These days we get to hear about Money Laundering. So lets see what exactly what it is.
Let us see some of the Important Terms:-
Fraud :
A false representation of a matter of fact - whether by words or by conduct, by false or misleading allegations, or by concealment of what should have been disclosed - that deceives and is intended to deceive another so that the individual will act upon it to her or his legal injury.
Scam :
A scheme designed with an intent to defraud a group of individuals or an enterprise(s) or a government(s) or a mix thereof, for getting some personal benefit - financial or fame, which requires violation of some law or flouting of certain established controls and involves a team work.
White Collar Offence :
An offence which does not result in any physical injury but results in a financial loss.
Money Laundering
Money laundering is the process of creating the appearance that large amounts of money obtained from serious crimes, such as drug trafficking or terrorist activity, originated from a legitimate source.
It is a crime in many jurisdictions with varying definitions.
It is a key operation of the underground economy.
Various Definitions:
Money laundering is the practice of disguising illegally obtained funds so that they seem legal.
The conversion or transfer of property derived from a criminal offense for the purpose of concealing, or disguising, the illicit origin of the funds.
Finance Definition : Making money that is generated through criminal activities appear as if it was earned through legitimate business activities.
The act of engaging in transactions designed to obscure the origin of money that has been obtained illegally.
In the past, the term money laundering was applied only to financial transactions related to organised crime.
Today, its definition is often expanded by government and international regulators to mean any financial transaction which generates an asset or a value as the result of an illegal act, which may involve actions such as tax evasion or false accounting.
Courts involve money laundering committed by private individuals, drug dealers, businesses, corrupt officials, members of criminal organizations and even states.
Do You Know
$1 trillion is currently being laundered worldwide.
It has been estimated that between 5% to 10% of global GDP comprises of criminal proceeds.
In the UK alone, £20 billion is generated annually by organised crime.
More money is stolen from the African continent every year than is donated in aid.
Techniques in Money Laundering
Placement
Getting Currency into the financial system so as to convert illicit funds from cash straight into a financial instrument or bank account.
Layering
The movement of funds from institution to institution to hide the source and ownership of the funds, obscure the audit trail and sever the link with the original crime.
Integration
The reinvestment of those funds in an ostensibly legitimate business so that no suspicion of its origins remains and to give the appearance of legitimizing the proceeds.
Emerging Money Laundering Trends
1.use of companies for money laundering,
2.use of real estate for money laundering,
3.trade based money laundering, and
4.New Payment Methods (NPM’s).
Use of Companies for Money Laundering
Companies have always been a valuable way to “layer” the criminal funds, to further obscure their origin.
They are used in two ways:
companies specifically formed for that purpose; and
existing companies “hijacked” for money laundering purposes.
Use of Real Estate for Money Laundering\
The money laundering method of choice for criminals.
High value of investment.
Single transaction in; single transaction out.
Historically, an appreciating asset while held.
Trade Based Money Laundering
At its simplest, falsifying the value of a transaction, usually by means of inflated/ deflated invoices.
Low-tech.
Highly effective.
Very commonly seen.
New Payment Methods (NPM’s)
Sometimes called “e-money” or “digital cash”.
Examples include: internet payment services, pre-paid calling cards, credit cards, digital precious metals, electronic purses, mobile payments (“m-payments”), etc.
M - Payments
Worldwide, there are fewer than 1 billion bank accounts.
Worldwide, there are in excess of 3 billion mobile phones.
In Africa, only 20% of the population has a bank account.
M-payments facilitate wider access to financial services.
Workers can be paid by phone.
They can then pay bills, transfer money, receive credits, open accounts and check balances on the mobile phone itself.
No requirement for a bank or ATM, the phone is a “virtual” ATM.
Let us see some of the Important Terms:-
Fraud :
A false representation of a matter of fact - whether by words or by conduct, by false or misleading allegations, or by concealment of what should have been disclosed - that deceives and is intended to deceive another so that the individual will act upon it to her or his legal injury.
Scam :
A scheme designed with an intent to defraud a group of individuals or an enterprise(s) or a government(s) or a mix thereof, for getting some personal benefit - financial or fame, which requires violation of some law or flouting of certain established controls and involves a team work.
White Collar Offence :
An offence which does not result in any physical injury but results in a financial loss.
Money Laundering
Money laundering is the process of creating the appearance that large amounts of money obtained from serious crimes, such as drug trafficking or terrorist activity, originated from a legitimate source.
It is a crime in many jurisdictions with varying definitions.
It is a key operation of the underground economy.
Various Definitions:
Money laundering is the practice of disguising illegally obtained funds so that they seem legal.
The conversion or transfer of property derived from a criminal offense for the purpose of concealing, or disguising, the illicit origin of the funds.
Finance Definition : Making money that is generated through criminal activities appear as if it was earned through legitimate business activities.
The act of engaging in transactions designed to obscure the origin of money that has been obtained illegally.
In the past, the term money laundering was applied only to financial transactions related to organised crime.
Today, its definition is often expanded by government and international regulators to mean any financial transaction which generates an asset or a value as the result of an illegal act, which may involve actions such as tax evasion or false accounting.
Courts involve money laundering committed by private individuals, drug dealers, businesses, corrupt officials, members of criminal organizations and even states.
Do You Know
$1 trillion is currently being laundered worldwide.
It has been estimated that between 5% to 10% of global GDP comprises of criminal proceeds.
In the UK alone, £20 billion is generated annually by organised crime.
More money is stolen from the African continent every year than is donated in aid.
Techniques in Money Laundering
Placement
Getting Currency into the financial system so as to convert illicit funds from cash straight into a financial instrument or bank account.
Layering
The movement of funds from institution to institution to hide the source and ownership of the funds, obscure the audit trail and sever the link with the original crime.
Integration
The reinvestment of those funds in an ostensibly legitimate business so that no suspicion of its origins remains and to give the appearance of legitimizing the proceeds.
Emerging Money Laundering Trends
1.use of companies for money laundering,
2.use of real estate for money laundering,
3.trade based money laundering, and
4.New Payment Methods (NPM’s).
Use of Companies for Money Laundering
Companies have always been a valuable way to “layer” the criminal funds, to further obscure their origin.
They are used in two ways:
companies specifically formed for that purpose; and
existing companies “hijacked” for money laundering purposes.
Use of Real Estate for Money Laundering\
The money laundering method of choice for criminals.
High value of investment.
Single transaction in; single transaction out.
Historically, an appreciating asset while held.
Trade Based Money Laundering
At its simplest, falsifying the value of a transaction, usually by means of inflated/ deflated invoices.
Low-tech.
Highly effective.
Very commonly seen.
New Payment Methods (NPM’s)
Sometimes called “e-money” or “digital cash”.
Examples include: internet payment services, pre-paid calling cards, credit cards, digital precious metals, electronic purses, mobile payments (“m-payments”), etc.
M - Payments
Worldwide, there are fewer than 1 billion bank accounts.
Worldwide, there are in excess of 3 billion mobile phones.
In Africa, only 20% of the population has a bank account.
M-payments facilitate wider access to financial services.
Workers can be paid by phone.
They can then pay bills, transfer money, receive credits, open accounts and check balances on the mobile phone itself.
No requirement for a bank or ATM, the phone is a “virtual” ATM.
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