What is money laundering criminal activity ?

What is money laundering?

According to one political commentator it is all about deception, its aim is to convince relative authorities of the legal origin, existence and/or application of illegal sources of income and the subsequent possession of that income. Money laundering plays a fundamental role in facilitating the ambitions of drug traffickers, terrorists, organised crime syndicates, inside dealers, tax evaders as well as many others who need to avoid the kind of attention from authorities that sudden wealth brings from illegal activities. This facility is the placing of such proceeds beyond the reach of asset forfeiture laws. Hence, money laundering is an essential task carried out by all organised crime groups, and therefore if treated and analysed properly could be the tool with which authorities could prosecute organised crime syndicates.

The conversion or transfer of property, knowing that such property is derived from serious crime, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in committing such an offence or offences to evade the legal consequences of his action, and the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property, knowing that such property is derived from serious crime


United Nations definition of Money Laundering:
oney laundering is a process which disguises illegal profits without compromising the criminals who wish to benefit from the proceeds. It is a dynamic three-stage process that requires: first, moving the funds from direct association with the crime; second, disguising the trail to foil pursuit; and third, making the money available to the criminal once again with the occupational and geographic origins hidden from view

What methods are used to Money Laundering ?

There are three stages involved in money laundering; placement, layering and integration.

How money Laundering affects the financial institutions

Financial institutions, such as banks, stockbrokers, life assurance firms and so forth, who either intentionally or unintentionally launder money, are also at risk and is another problem associated with money laundering. Banks are susceptible to risks from money launderers on several fronts. There is a thin line between a financial institution suspecting that it is being used to launder money and the institution becoming criminally involved with the activity. Banks that are exposed as laundering money are most certain to face costs associated with the subsequent loss of business on top of vast legal costs.

What is the money laundering risk to the Financial System ?

Another important area of risk to the financial system is the risk posed to the securities markets, most notably the derivatives markets. Owing to the complexity of some derivative products, their liquidity and the daily volume of transactions, these markets have the ability to disguise cash flows and hence are attractive to money launderers. However, their activities pose huge risk to these markets. Firstly, brokers used to execute orders on behalf of money laundering clients may be criminally liable for aiding and abetting money launderers. What may possibly be of greater concern than that is the money launderer's skilful manipulation of the futures markets. With regard to local futures exchanges, individuals have colluded to take correspondingly short and long positions so as to clean money debts being paid with dirty money, at the same time profits now being clean money.

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