Money Laundering

Money laundering is the act of taking illegal money ("dirty" money) and putting it through a cycle of transactions that “washes” the funds and “cleans” them, making the money look like proceeds from legal activities. A money launderer is a person or a group that either has possession of the proceeds of a crime or of the assets that represent the proceeds of illegal activities such as fraud, theft, drug trafficking, or any other crimes.

Fast Facts

1. Money laundering is illegal
2. International problem, international co-operation is critical in the fight against it
3. Anti-money laundering standards have been established for all countries
4. FATF was established by the G-7 Summit in Paris in 1989 as a co-coordinated international response

Smurfing

1. Dividing a large transaction in many smaller ones to avoid suspicion
2. A person or group deposit money in to different banks at different times small parts of a large sum
3. Avoids the scrutiny which large sums attract
4. Term derived from the cartoon characters, The Smurfs, who lived in a large group of many small entities
5. Aka: Structuring

Offshore Money Laundering

1. Money transferred from account to account
2. Final deposit made in a country where laws guarantee a lack of scrutiny

Legitimate/Fake Companies

1. Use of legitimate companies: "dirty" money mixed with "clean" money derived by legitimate activities
2. Casinos are notorious targets for money laundering given the "cash heavy" transactions
3. Use of fake companies: payment for services that were actually never provided

Prevention in U.S.

1. 1970: Bank Secrecy Act established
2. This act aimed to detect and prevent money laundering
3. 1986: Congress passed Money Laundering Control Act
4. The act recognizes money laundering as a federal crime
5. Office of the Comptroller of the Currency established to enforce the finance laws

Related Pages on Mahalo

Mexican Mafia | Russian Mafia | Triads | Yakuza

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