How Does Money Laundering Work?
Money laundering is a criminal act in many jurisdictions, including the U.S., the U.K., Canada and Australia. It's an act of laundering money obtained illegally through crimes, including currency fraud, drug trafficking, bank fraud, asset fraud involving international transfers. It's also a principal function of the underground financial industry. Financial crime is becoming more sophisticated and probably the most serious global crime today.
It's an offence that can have harsh penalties, including prison time, in some cases. However, the fines for money laundering are typically very minor compared to other types of crimes. Some laws address money laundering and those that criminalize money laundering operations. These include:
The three stages of money laundering include origination, transfer and clearance. When laundering occurs, the criminals first conduct origination. This includes gathering funds, concealing transactions, and transferring from the point of origin to the final destination. This can be done through wire transfers, fax transfers or any number of other means.
Next, criminals transfer the illegal funds. This includes concealing the nature and location of where the funds are coming from and who is funding the transactions. Another method is to make indirect transfers or make "dummy" transactions to hide the true nature of where the funds are coming from. For example, if an individual were to pay for hotel accommodation using a credit card, the cost of the housing would be recorded as coming from an offshore account. However, it could also come from a credit card payment that originated in the local currency.
Therefore, this kind of transaction would not be considered money laundering.Finally, the criminals who make the transactions also need to be discussed. The reason for this is so that both parties have to be held accountable. Criminal liability can be either criminal or civil. The victims or criminals themselves bring about criminal liability. Civil liability is brought about by the government or the victims themselves.
One interesting thing to note about money laundering in the USA today is that there are very few laws that address the conduct of criminals who do not have currency. This means that many crimes are occurring that don't involve physical money. For example, consider some of the most high-profile crimes in the news, such as the Enron fraud.
Many people believe that these types of criminals are isolated and will not affect legitimate financial systems. It is not unusual for criminals to use fake identification to make it easier to access money from banks and other institutions. It also takes many years for these criminals to be caught through the criminal justice system. This is why many countries worldwide have large departments of money laundering detectives and police officers who constantly monitor and investigate any potential instance of money laundering.
The next time you hear about money laundering in the USA, remember that you can become a victim of this criminal activity. While it is easy to assume that only large international corporations and governments are at risk, that couldn't be further from the truth. This crime is more prevalent and perhaps more profitable than most people realize simply because most people aren't aware of it and don't understand its importance. That means that you could easily become a victim of money laundering and not even know about it.
One of the best ways to protect yourself from illicit funds is by being aware of suspicious activity on your account. You should report anything that seems out of place to your bank or financial institution. Your bank will perform an investigation into the situation and will look into the matter. They may ask for documentation or even talk to the law enforcement authorities regarding your suspicions. Even if you don't believe there to be illicit funds tied to your account, it never hurts to be extra careful.
Even legitimate businesses can fall victim to money laundering. For instance, it has been proven that criminal organizations can use secret financial systems to obtain large amounts of money. This means that businesses are no longer safe from unscrupulous organizations that can steal their money in numerous ways. If you suspect money laundering or any other type of illegal activity, you should immediately inform your local law enforcement agencies.
Organized crime in the United States is not a new problem. The issue of money laundering works both ways: on the one hand, it is used as a tool by criminals to steal money and other assets; and on the other hand, it also works to protect the country's financial system. Those who provide financial services to clients need to be aware of money laundering and regularly check their accounts for suspicious activities. To know more about money laundering and other money laundering works, you may want to take a look at CIBC University.