What is Money Laundering? Black Money?

The origin of the expression “money laundering” is that money acquired illegally is called dirty money . This money is often derived from trafficking in weapons, drugs, human beings or other mafia activities. Laundering money allows the money to be spent to without any illegal acts being tied to it. Another possible origin of the term “money laundering” comes from the fact that Al Capone, the head of a Mafia family in the in 1920’s in Chicago, used a chain of laundries called the the Sanitary Cleaning Shops . This allowed him to cover illegal money and recycle resources from many of its illicit activities. Money laundering was not used in a court case until 1982. However, the arrest of Al Capone for tax evasion, and not for crimes committed, shows the importance and difficulty of laundering money in the fight against organized crime.

The mafioso Lucky Luciano and Meyer Lansky right arm from 1932 understood the importance of inventing new techniques for money laundering, including through the network of politically independent islands or the well known terms, offshore countries. Money-laundering methods With the fight becoming increasingly important against the laundering of money from banks and tax havens, as well as the lifting of banking secrecy on the orders of Justice, criminals were forced to turn to others to launder their money. Businesses such as jewelers and companies who commonly import and export were the first targets to launder money. The creation of a number of false invoices from dummy companies can pose as clean money.

But there are of course many other methods, the imagination of criminals in this case is almost limitless, for example, smurfing is probably the most common method of money laundering. This method requires the involvement of many individuals whose role is to deposit cash in bank accounts or to obtain bank drafts of less than $10k of the currency of the said country to avoid the reporting threshold. Complicity bank is when an employee of the bank was criminally involved to facilitate the process of money laundering.

Another way to launder money is called company remittance and exchange, in this method offices make available to their clients that allow them to earn foreign currency that can be taken across the border. It may also, through these offices, telegraph money to accounts in foreign banks. It is even possible to obtain mandates, bank checks and travelers checks through these companies. Procurement of goods for cash is were launderers buy and pay cash for high value goods such as cars, boats and certain luxury goods such as jewelry or electronic equipment. They will use these items, but they buying on behalf of a partner. Electronic Funds Transfer, also known as electronic or wire transfers, is a method which the criminal can transfer funds from one city or one country to another to avoid the physical transportation of money. Money orders are used in technique which exchanges cash against mandates outpost, which are then sent abroad to end bank deposit.

Credit cards can be used by criminals pay the balance in excess of their credit cards and keep a high credit balance which can be used in many ways such as purchasing goods or conversion value of the credit balance in check. Casinos used to be commonly used launderers where they buy tokens in exchange for cash and then collect their fees by check. Refining is a technique which involves exchanging small against large cuts in order to decrease the volume. To this end, the money launderer exchange large sums of money from one bank to another to avoid arousing suspicion. This is to reduce the large sums of money.

Alteration of values is when launderer purchases a property of a person willing to declare a price significantly below the real value of the property and pay the difference in cash “in secret”. The launderer can buy a home worth two million dollars for only a million and secretly send the seller the rest of the money it owes. After a certain period of detention of the property, the money launderer sells its real price, or two million dollars. Auto loans are used when a dealer gives an accomplice money illegally. This accomplice lends a sum equivalent loan documents in support, to create the illusion that the criminal money is legitimate. The schedule for repayment of the loan by the Criminal adds to the appearance of legitimacy of the combine, and provides yet another way to transfer funds.

Amalgamation of funds in legitimate businesses is a metheod of money laundering by criminal organizations and individuals that are involved where money is landered by investing in companies that normally have a high volume of cash transactions to include the proceeds of crime to business legitimate brewed by the company. Finally, some criminals buy businesses that generate gross receipts from sales in cash. This is the case of restaurants, bars, nightclubs, hotels, and vending machine companies. They then invest those funds obtained by fraudulent means by combining with an income that otherwise would not be sufficient to support a company honest.

With globalization of trade and capital are becoming increasingly important and frequent, the fight against money laundering is now done on an international scale. Thus, groups like the FATF (Financial Action Task Force), meet regularly to develop and implement new methods to combat and adapt to new techniques of criminals. Money laundering contributes (among others) the financing of terrorism, political parties, unions, etc.. States have established various agencies and services in the fight against money laundering.

However, criminals are finding it increasingly difficult to use this method because of the guiding principles, practices and training methods advocated all over the world including the United States, Canadian Bankers Association (CBA), and in France with the French Banking Federation. Additionally strict enforcement of legislation (Monetary and Financial Code and Penal Code) along with banking regulation had made money laundering tougher to perform.

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