Money Laundering Essay

2504 words - 10 pages

What is Money Laundering?
Money laundering is when funds from criminal activity are converted into “clean money” and cannot be traced back to the criminal activity. The goal is to conceal the criminal activity and the criminals involved. One of the main reasons people commit criminal acts is to make money off of it. Money laundering allows criminals to enjoy these illegal proceeds without law enforcement noticing.
Money laundering can be used in drug trafficking, terrorism financing, or tax evasion. Obviously selling drugs is illegal. The drug industry is known to turn out a pretty hefty profit. Drug traffickers will launder money to hide their illegal drug sales. The United States is always looking at ways to prevent terrorism. Terrorists launder money, so law enforcement cannot detect where their funding has come from. Some people may launder money as a way to evade taxes. They do not want to pay taxes on their income so they hide this money by laundering it, so they do not have to report it.
The Money-Laundering Process
Money laundering can sometimes involve multiple steps to conceal where these illegal funds came from. One of the steps is placement of the money. The goal is to deposit the funds into a bank account without drawing attention to it (Cliff and Desilets 2). It is likely the deposits will be structured, meaning multiple small deposits, possibly into several accounts at several banks. At this point the money can be switched to trade goods or even converted into other currencies. A lot of times the cash or trade goods are transferred away from the country the crime was committed (Cliff and Desilets 2).
Layering is the second step in the money laundering process. In this step the funds are moved multiple times to distance them from the original source (“Money Laundering”). They could buy a series of negotiable and investment instruments or wire the funds through multiple accounts at multiple banks across the globe (“Money Laundering”). The third step is integration, which is when the funds reenter the legitimate economy. Often times the illegal money is intertwined with legitimate money (Cliff and Desilets 3).
Why is Money-Laundering a Threat?
Money laundering can be detrimental to a country’s economy. It can be difficult for legitimate activities to compete, and it can cause unpredictable changes in money demand (“Consequences of Money Laundering”). It hurts businesses due to people being able to buy products for cheaper from people with laundered money in an effort to get clean money. Also these businesses have to deal with tax increases to make up for the loss of money the government is not receiving due to money laundering.
A lot of laundered money filters through financial institutions. This can cause financial institutions to risk their reputation. Whether they are an accomplice or had no knowledge of the dirty money, the bad name recognition can cause investors and customers to lose faith in the organization...

Find Another Essay On Money Laundering

Business Fraud: Pyramid Schemes, Tax Fraud and Money Laundering

1746 words - 7 pages UK fall victim to fraudsters (Action Fraud). This paper discusses three common types of business fraud, which include Pyramid schemes, tax fraud and money laundering. Business fraud is highlighted by illegal and unethical business behavior which is very serious in the business world and calls for very punitive measures like lengthy jail sentences, being blacklisted in business and end to very promising careers. Pyramid Schemes These are

Who is winning the war between the United States Law Enforcement against Money Laundering in 2013?

2244 words - 9 pages because of tax evasion (actually considered as money laundering charges, too), he needed to make his money seems as legal money so the police won’t have any reason to suspect him. However, the situation for money launderers is not the same as Al Capone’s. If Al Capone was alive, he would need a variety of techniques to launder his money. As time has passed and technology has been improving so has money laundering techniques, but the United States

organized crime

1056 words - 5 pages In terms of criminal activity, organized crime resembles a business company or corporation. The main purpose of an organized crime group is to make profit through illegal means (Laplante, Impact of OC on Society). By examining Pierre De Champlain definition of organized crime, the criminal business highlights economic consequences, such as money laundering and the hierarchical structure, that may occur when a Hells Angels member sets up a bar

Regulatory Intervention Within Major UK Banks

1011 words - 4 pages authorities fined HSBC $1.9 billion for not having adequate systems and controls in place to prevent money laundering within HSBC. HSBC Holdings Plc offers a wide range of products and services across the globe from current bank accounts, mortgages to investments and wealth management. They are a multinational corporation with 27 principal subsidiaries across the world. This complex matrix of multinational crossovers creates risk mitigation

Multinational Banks

1928 words - 8 pages People in the modern world keep their funds stored in some type of financial institution, whether it’s a small local bank that only operates in a small town or a large multinational bank that has offices in every major city around the world and caters to millions of people. With the responsibility of handling the assets of millions of people banks are sometimes accused for activities that may be illegal, such as money laundering: the method of

September 11, 2001 Commission Report

3287 words - 13 pages of much of the USA PATRIOT ACT has been altered to be more specific in reference to terrorism and funding due to this (http://www.fincen.gov/hr3162.pdf).Title ThreeTitle three is the International Money Laundering Abatement and Anti-Terrorist Financing act of 2001. The international Monetary Fund had found that $600,000,000,000 on an annual basis is laundered. This is about two to five percent of global gross domestic product. Congress has found

The Computer Misuse Act 1990

1936 words - 8 pages act it is deemed an offence for an individual to be involved in arrangements that have indications of being of assistance to another person in “acquiring retaining, using or controlling the proceeds of crime” Anyone that suspects that any type of criminal activity is going on e.g. Money Laundering is under obligation to report this to the firm’s money laundering officer. The officer would then report this to the

Description and Analysis of Bitcoin

714 words - 3 pages used to sign transactions. The signature prevents a transaction from being altered. Bitcoin CEO Arrested Bitcoin made headlines in Jan. 2014 when a major Bitcoin exchange company founder was arrested for selling digital currency to customers trafficking narcotics through Silk Road, a drug website. BitInstant CEO Charlie Shrem was arrested and charged with conspiring to commit money laundering and operating an unlicensed money transmitting

Cartel and the Cocaine Industry

1348 words - 5 pages . Finding sufficient numbers of people who are willing to risk their lives and freedom, and who will not cooperate with law enforcement agencies, is the first barrier. A distribution network also requires airstrips, hidden warehouses, and corrupt officials, and these take time and money to develop (Bernards, 1990). Cali's network is also highly compartmentalized, and proficient at laundering the large quantities of cash it generates. Because of the

The Banking Consolidation Directive

871 words - 3 pages mandates banks to have minimum standards compensation scheme in case a bank goes into distress. Other Directives on money laundering to check money laundering corruption and organised crimes, electronic commerce directive to ensure electronic transactions across borders, and the distance commerce directive harmonises domestic consumers from a distance laws protecting have revolutionalised banking within the EU. It is obvious from the tone of the

"Corruption and Transborder Criminality"

838 words - 3 pages Money Laundering"Conclusion: Governance in area of organized crime, drug trafficking, and money laundering is seriously inadequate because of systemic conditions.Williams suggests three levels of governance that have taken steps to deal with the issue of international crimes: the creation of international norms, information sharing among law enforcements, and education and eradication programs. These levels have been most effective when

Similar Essays

Money Laundering Essay

1196 words - 5 pages According to the U.S. Department of Justice, money laundering is the process by which one conceals the existence, illegal source, or illegal application of income and then disguises that income to make it appear legitimate. Money laundering involves a three step process which includes placement, layering and integration (Albrecht et al, 2009). Placement is the first step and it includes the launderer opening up an account at a bank or some

Money Laundering Essay

3732 words - 15 pages Money Laundering In a recent movie Mickey Blue Eyes, there is a comical scene in which an unknown artist’s painting is sold to a buyer for $50,000. It seems as though a restaurant owner owed the mafia a large sum of money and he paid them by bidding an absurd amount of money for a horrid painting. The movie made this scene seem quite innocent and funny (See Appendix 1 for more examples). Unfortunately money laundering is a serious crime

Money Laundering Essay

1886 words - 8 pages analysis provider’ which focuses its products in sensitive areas of global interests such as defence, security, law enforcement, public safety, and transport. This essay will evaluate the validity of IHS Jane’s Information Group in the specific area of money laundering in Colombia. The database will be evaluated under the scope of its Authority, Accuracy, Objectivity, Currency, and Coverage. First of all, it is important to highlight that

Illegal Drug Use, Illegal Prostitution, And Money Laundering

2614 words - 10 pages girls from developing economies are common victims of such practices. On the other hand, child trafficking entails forcing underage children to engage in sexual practices without their consent. Crusaders for the legalization of prostitution argue that the practice should be legalized since it does not constitute to any form of crime. III. Money Laundering Money Laundering (n.d) defines money laundering as a financial transaction strategy that