Discuss the stages of Money Laundering
Posted by Ripon Abu Hasnat on Monday, May 26, 2014 | 0 comments
Despite the variety of methods employed, the laundering is
not a single act but a process accomplished in 3 basic stages which may
comprise numerous transactions by the launderers that could alert a financial
institution to criminal activity -
Placement -
the physical disposal of the initial proceeds derived from illegal activity. It
is occurred by:
Cash paid into bank (sometimes with staff complicity or
mixed with proceeds of legitimate business).
Cash exported.
Cash used to buy high value goods, property or business
assets.
Cash purchase of single premium life insurance or other
investment.
Layering -
separating illicit proceeds from their source by creating complex layers of
financial transactions designed to disguise the audit trail and provide
anonymity. It is occurred by:
Sale or switch to other forms of investment.
Money transferred to assets of legitimate financial
institutions.
Telegraphic transfers (often using fictitious names or
funds disguised as proceeds of legitimate business).
Cash deposit in outstation branches and even overseas
banking system.
Integration -
the provision of apparent legitimacy to wealth derived criminally. If the
layering process has succeeded, integration schemes place the laundered
proceeds back into the economy in such a way that they re-enter the financial
system appearing as normal business funds. It is occurred by:
Redemption of contract or switched to other forms of
investment.
False loan repayments or forged invoices used as cover for
laundered money.
Complex web of transfers (both domestic and international)
makes tracing original source of funds virtually impossible.
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