Anti Money LaunderingJoin now to read essay Anti Money LaunderingIn today’s high tech digital age, it has become increasingly more difficult for lawbreakers to conceal their illegally obtained funds through criminal business practices. Criminals are being forced to hide their money from government institutions to avoid taxation and investigations into their shady dealings. One way criminals go about hiding this ill gotten cash is to launder their money through banks, brokerage houses, investment firms and many other financial businesses to make it appear as if the money is clean and obtained legally. Money laundering is a method used by criminals to conceal their income obtained from criminal activities such as drug trafficking and organized crime. This process allows criminals to effectively legitimize their dirty money by mixing it with clean money. It usually involves a series of transactions from bank account to bank account with the hope of thwarting law enforcement and remaining unnoticed as a criminal. Money laundering has become a worldwide problem that has globally devastating effects. After the money is laundered it usually returns to the hands of drug dealers, terrorists, gun traffickers and other criminals so they may continue their harmful and dishonest illegal operations. The International Monetary Fund has stated that “the aggregate size of money laundering world wide is somewhere between two and five percent of the world’s gross domestic product” (Wayne, 4). In a US currency this would be between $590 billion and $1.5 trillion, which continues to grow each year despite increased government initiatives to combat this practice. After September 11, 2001, money laundering became a top priority of the Bush administration’s war on terrorism after it was revealed that funds supporting Al Qaeda were laundered through banks in Luxembourg. One way in which financial businesses are fighting back is by creating Anti-Money Laundering policies that make it extremely difficult for criminals to slip under the radar. The government has also taken actions such as the Patriot Act which hopes to put an end to money laundering. In the following paragraphs we will take a more in-depth look at the process of money laundering, how it effects businesses and economies, and analyze measures being taken to fight this illegal process.
To launder money effectively criminals must follow three key steps. The first step is referred to as placement; this is the disposing of criminal revenue by depositing the funds into one of many legitimate business enterprises such as a bank, hedge/mutual fund or stock market. The second step is to layer the cash. Layering is how criminals separate themselves completely from the money so there is no way of determining the original source. By moving the funds to bank accounts all over the world the criminals set out to make it difficult to create an audit trail allowing their money to eventually look clean. The final stage is referred to as integration. Integration is the process of using the newly cleaned money within an economy as legitimate cash.
To better understand this process we can look at one way this process would work from start to finish. Let’s say Mr. X wants to launder Ђ1 million he would place the money into an account at the Bank of Ireland in Dublin. From there he would begin the layering process by transferring the funds to another account under a different name in a Luxembourg bank. After that he would continue to layer the cash by wire transferring the money to an offshore bank in Bermuda. The reason it would be sent to Bermuda is because they keep their clients information private and do not have to report to a legislative body on their practices. Then Mr. X withdraws the funds from his Bermuda bank and loans it to a legitimate company in need of investment capital. When Mr. X calls in the loan he will receive a certified check from the company’s bank, which is completely legal and upstanding. From there he will proceed to integrate his money into the economy by purchasing real estate, sports cars, and investing the rest in stocks. Mr. X has now successfully cleaned his dirty money without worrying about investigation or arrest.
When it comes to money laundering, criminals are ingenious and careful about how to clean their money. Since banks have begun to implement measures to deter money laundering, criminals have found new ways around this. Criminals have started seeking out the help and advice of professionals such as accountants, lawyers, and stockbrokers. These financial professionals are known as “gatekeepers”. “Notaries, solicitors, and accountants may be sought out by crime groups who desire to profit from their expertise in setting up schemes that will help to launder criminal proceeds” (JP Morgan Tranaut). These professionals have an immense understanding of how financial institutions run and are knowledgeable in ways around their systems.
The Financial Justice League has been a global group of more than 200 law enforcement organizations led by prominent members across the community in the United States and the world. It has provided information and resources to law enforcement agencies in a variety of jurisdictions around the world and has provided financial services, services for attorneys to support agencies of the Justice League, and financial support to law enforcement organizations to assist them in other legal activities.
The GJL works to ensure that law enforcement organizations take steps in a proactive manner to combat money laundering. In addition to their mission for preventing money laundering, these law enforcement organizations seek to do the following:
â—Ź Provide legal services to money launderers and financial institutions: In addition to providing legal assistance to victims of such crime, the GJL provide legal services to law enforcement members and their affiliates, including financial services and service companies, and to government departments and organizations of international interest. In addition, a GJL can provide assistance if: The GJL is on duty or, if the GJL is within 30 days of a bank reporting an alleged financial crime to its authorities, the GJL is conducting criminal investigations with the view to prosecuting any other bank to the extent that it might engage in financial crime.
â– Ensuring that criminal organizations are engaged in investigations: If law enforcement agencies have information that an organization or individual engaged in a financial crime or in a course of conduct intended to benefit the organization are engaged in criminal proceedings in a criminal investigative capacity or to the extent necessary to provide services the agency takes action if the information is available to the GJL.
â– Working with the U.S. Government
The GJL works to support the efforts of law enforcement agencies committed to protecting the federal financial system and to combating money laundering and related criminal activities.
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