Money laundering is one of the key ‘engines of crime’ sustaining global criminal business worth billions of dollars. The task of combating it has become more difficult, due to the increasingly global and virtual nature of financial services and the emergence of technology-enabled factors such as crypto-currencies and anonymisation tools that frustrate the identification of beneficial owners. Controlling much of this mega-illicit activity are global money laundering syndicates, who offer their services at scale to criminal networks, and are highly adept at exploiting gaps in the financial system. These are the challenging conditions within which anti-money laundering (AML) arrangements currently operate that set a very high bar for success in curtailing the international flows of illicit funds.
The process of money laundering is to create the appearance that large amounts of money obtained from serious crimes, such as drug trafficking or terrorist activity, originated from a legitimate source.
There are 3 different distinct categories of money-laundering:
The stage at which money is injected into the financial system.
The transaction stage during which the money is passed through several financial instruments and vehicles to give the appearance that the money is from a legitimate source.
The stage at which the ‘washed’ money is re-introduced to the financial system, and given its legitimacy, it can now be used without the appearance that it was previously from proceeds of crime.
Take note that the process may not follow in order, or utilise the entire 3 stages to complete a money laundering process.