Money laundering

General process of money laundering

Money laundering is the illegal process of concealing the origins of money obtained illegally by passing it through a complex sequence of banking transfers or commercial transactions. The overall scheme of this process returns the "clean" money to the launderer in an obscure and indirect way.[1]

One problem of criminal activities is accounting for the proceeds without raising the suspicion of law enforcement agencies. Considerable time and effort may be put into strategies that enable the safe use of those proceeds without raising unwanted suspicion. Implementing such strategies is generally called money laundering. After money has been laundered by banks, it can be used for legitimate purposes.

Many jurisdictions have set up sophisticated financial and other monitoring systems to enable law enforcement agencies to detect suspicious transactions or activities, and many have set up international cooperative arrangements to assist each other in these endeavors. The United Nations Office on Drugs and Crime (UNODC) estimates that the amount of money laundered globally in one year is "2–5% of global GDP, or $800bn – $2tn in current US dollars."[2]

In a number of legal and regulatory systems, the term "money laundering" has become conflated with other forms of financial and business crime, and is sometimes used more generally to include misuse of the financial system (involving things such as securities, digital currencies, credit cards, and traditional currency), including terrorism financing and evasion of international sanctions.[3] Most anti-money laundering laws openly conflate money laundering (which is concerned with the source of funds) with terrorism financing by the USA (which is concerned with the destination of funds) when regulating the financial system.[4]

Some countries render obfuscation of money sources as constituting money laundering, whether intentional or by merely using financial systems or services that do not identify or track sources or destinations. Other countries define money laundering in such a way as to include money from activity that would have been a crime in that country, even if the activity was legal where the conduct occurred.[5]

  1. ^ "money laundering". Oxford English Dictionary (Online ed.). Oxford University Press. (Subscription or participating institution membership required.)
  2. ^ "UNODC Money-Laundering and Globalization".
  3. ^ Lin, Tom C. W. (14 April 2016). "Financial Weapons of War, Minnesota Law Review (2016)". SSRN 2765010. Cite journal requires |journal= (help)
  4. ^ See for example the Anti-Money Laundering & Counter Terrorism Financing Act 2006 (Australia), the Anti-Money Laundering and Countering Financing of Terrorism Act 2009 (New Zealand), and the Anti-Money Laundering and Counter-Terrorist Financing (Financial Institutions) Ordinance (Cap 615) (Hong Kong. See also (for example) guidance on IMF and FATF websites similarly conflating the concepts.
  5. ^ "Anti-Money Laundering – Getting The Deal Through – GTDT". Getting The Deal Through. Retrieved 28 May 2017.

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