What Is Money Laundering?

Money laundering is an illegal activity. It makes large amounts of money that's generated by criminal activity such as drug trafficking or terrorist funding appear to have come from a legitimate source. The money from the criminal activity is considered dirty and the process “launders” it to make it appear clean.

Financial institutions employ 澳洲幸运5官方开奖结果体彩网:anti-money laundering (AML) policies to detect and prevent this activity.

How Money Laundering Works

Money laundering is essential for criminal organizations that use illegally obtained money. Criminals 澳洲幸运5官方开奖结果体彩网:deposit money in legitimate financial institutions to make it appear as though it comes from legitimate sources. Laundering money typically involves three steps although some stages may be combined or repeated.

• Placement: Injects the “dirty money” into the legitimate financial system.
• Layering: Conceals the source of the money through a series of transactions and bookkeeping tricks.
• Integration: Laundered money is disbursed from the legitimate account.

Types of Transactions

Money laundering can take one or more forms:

• Structuring or smurfing: Large allotments of illegally obtained cash are divided into multiple small deposits and spread over many accounts.
• “Mules” or cash smugglers: Cash is smuggled across borders and deposited into foreign accounts.
• Investing in commodities: This uses gems and gold that can be easily moved to other jurisdictions.
• Buying and Selling: Cash is used for quick turnaround investments in assets such as real estate, cars, and boats.
• Gambling: Gambling uses casino transactions to launder money.
• Shell companies: Inactive companies or corporations are established that exist on paper only.

Electronic Money Laundering

The rise of online banking institutions, anonymous online payment services, and peer-to-peer (P2P) transfers w♔ith mobile phones have made detecting the illegal transfer of money increasingly difficult. Proxy servers and anonymous software make integration, the third component of money laundering, difficult to detect because money can be transferred or withdrawn with little or no trace of an internet protocol (IP) address.

Money can be laundered through online ꦕauctions and sales, gambling websites, and virtual gaming sites where ill-gotten money is conver🌞ted into gaming currency and then back into real, usable, and untraceable “clean” money.

Laundering may involve 澳洲幸运5官方开奖结果体彩网:cryptocurrencies such as Bitcoin. They're not completely anonymous but they can be used in blackmail schemes, the drug trade, and other criminal activities due to their relative anonymity compared with 澳洲幸运5官方开奖结果体彩网:fiat currency.

Prevention and Legislation

Global money laundering transactions account for roughly $800 billion to $2 trillion annually or 2% to 5% of global gross domestic product (GDP), according to the United Nations Office on Drugs and Crime. The 澳洲幸运5官方开奖结果体彩网:Group of Seven (G-7) formed an international committee known as the 澳洲幸运5官方开奖结果体彩网:Financial Action Task Force (FATF) in 1989 to fight money laundering on an international scale. Its purview was expanded to include terrorist activity in the early 2000s.

The United States passed the 澳洲幸运5官方开奖结果体彩网:Bank Secrecy Act in 1970 requiring financial institutions to report to the Department of the Treasury on a 澳洲幸运5官方开奖结果体彩网:suspicious activity report (SAR) all cash transactions above $10,000 or other unusual activity. This information is used by the Financial Crimes Enforcement Network (FinCEN) and is shared with domestic criminal investigators, international bodies, or foreign financial intelligence units.

Money laundering was deemed illegal in the United States in 1986 with the passage of the Money Laundering Control Act. The 澳洲幸运5官方开奖结果体彩网:USA Patriot Act expanded money laღundering efforts after Sept. 11, 2001.

The Association of Certified Anti-Money Laundering Specialists (ACAMS) offers a professional designation known as a 澳洲幸💧运5官方开奖结果体彩网:Certified Anti-Money Laundering Specialist (CAM♋S). These individuals work as brokerage compliance managers, Bank Secrecy Act officers, financial intelligence unit managers, surveillance analysts, and financial crimes investigative analysts.

The Bottom Line

Money laundering disguises 澳洲幸运♉5官方开奖结果体彩网:illegally obtained financial assets. Global governments and financial institutions have anti-money laundering measures in place.💖 Online activity and digital assets have added to money laundering transactions.