Money Laundering and its Method

Money laundering is the process to covert illegal money to make it look like it was generated from legitimate sources. Money normally comes from activities like drug, terrorist activities, and other illicit means. It is considered dirty and is laundered to make it legitimate money laundering is a serious crime that carries heavy penalties, including jail.

There are three steps to launder money: 

Placement: The money is introduced into the financial system, usually by breaking it into many different deposits.

Layering: The money is shuffled around to hide the source of origin.

Integration: The money is then brought back to the financial system as legitimate income or clean money.

Now we will touch upon channels thru which money laundering can be done:

a. Tax Evasion

b. Multiple Tier of Accounts

c. Funnel Accounts

d. Contra Transactions

e. Bank Drafts and Similar Instruments

f. Cash Deposits followed by Transfers

g. Connected Accounts

h. Smurfing/Structuring

i. Money Mules

j. Shell Companies

k. Front Companies

l. Dormant Accounts

m. Wire transfers

n. Collections accounts

o. Payable Thru accounts

p. Back to Back Loan

q. International Trade Finance

r. Offshore banks

s. Credits cards

t. Bureaux de change (money changer)

u. Remittance Services

v. Hawala System

w. Insurance Policy

x. New digital channels (like net banking)

y. Gold and diamond Markets

z. Misuse of Non profit orgnizations.

We will go in brief in next paragraph for above method and channels.

Important point to note :

Money laundering involves hiding large amounts of money made illegally to make it look like it was generated legitimately.

Money laundering is a serious crime that carries heavy penalties, including jail time.

Fraudsters often use smurfs, mules, and shells to play, layer, and integrate their money into the financial system.

The digital age helps money launderers stay under the radar and one step ahead of financial authorities.

Financial institutions, corporations, their employees, and other individuals can help fight money laundering by adhering to anti-money laundering policies and other policies, such as strict identification protocols.

What Are Common Ways to Launder Money?

The traditional forms of laundering money, including smurfing, using mules, and opening shell corporations. Other methods include buying and selling commodities, investing in various assets like real estate, gambling, and counterfeiting. The rise of digital technology also makes it easier to launder money electronically.

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Chandan Kumar Yadav
My name is Chandan Kumar Yadav CDCS, CSDG, CITF, PGDIBO,AML-KYC, CCFE, MLIBF, CSF, 6SIGMA a trade finance professional with an experience of 11 years whereas worked with several stages of letter of credit, bank guarantee and on other payments methods of trade transactions such as documentary collection, open accounts, SBLC etc., I have a fair understanding of Trade Based Money Laundering as well, Blogging related to Trade Finance is my passion and I want to share which I know and learn from others, I have worked with Wells Fargo, Yes Bank Limited and Bank of America, India which helped me to gain knowledge, view of Trade Finance and importance of International Trade in world's economy. Trade Finance is thumping product, everyday we are learning something new so in order to keep learning I started this as one of the platform. . Let's Learn Together

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