The no disclosure policy in those tax haven countries makes the criminals feel safe, defeating the law. Offshore Accounts- Individuals with unexplained excess credits place such money into bank accounts of countries with less or no jurisdiction related to anti-money laundering. Stored value cards are often used to launder such illegal money by purchasing items from that money. Smurfing- Smurfing, also referred to as structuring, is when criminals break a large number of funds into small chunks of cash, making multiple transactions and spreading the amount to different accounts, thereby making it hard to detect the origin.Įlectronic money- There are many ways where criminals can acquire money, whether by infusing malware, phishing, account hackers, or other vectors. The most commonly used methods of money laundering are. ![]() The ways to launder money are always evolving as criminals have come up with creative ways to launder their illicit funds. The criminal might then invest such clean money into a legal business claiming payment by producing fake invoices or even start a bogus charity, placing themselves on the board of directors with an exorbitant salary. ![]() Integration- Such well-placed and well-layered money again enter the financial system, obliterating the original association with crime and using such laundered money as if it came from clean sources, thus defeating the law. Transactions like the purchase of tradable assets like expensive cars, artwork, and real estate can also be included in layering the funds. Layering- The money so injected by placement is moved or spread over various transactions in different accounts of the same country and other countries where anti-money laundering laws are not so stringent, thus, making it difficult to trace the source. That is often done by depositing funds into a bank account registered to an anonymous corporation or a professional middleman. Placement- At this stage, the money launderers inject the crime money into the financial system. Money laundering is a three-step process, namely, placement, layering, and integration. ![]() Anti-money laundering measures have gained importance to prevent and curb such practices. Money laundering is a serious financial crime. It is an illegal exercise that converts black money into white money. Money laundering is the process of hiding the source of money obtained from illegal sources and converting it to a clean source, thereby avoiding prosecution, conviction, and confiscation of the criminal funds. An abundance of black money leads to the origin of several illegal practices, and money laundering is one such process to disguise the source of such funds.
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