Overview of Money Laundering
MONEY LAUNDERING EXPLAINED: https://www.youtube.com/watch?v=1ObJPaSZxCs
As highlighted by the preceding video, Money laundering is the process by which criminals attempt to hide and disguise the true origin and ownership of the proceeds of their criminal activities. These proceeds includes illegal funds (cash) & other assets.
Criminal Activity includes:
- Drug trafficking
- Bribery/Corruption/Tax Evasion
- Counterfeiting & Forgery
- Manipulation of records
- White Collar Crimes (e.g. Insider Trading)
To be able to prevent money laundering, you need to understand how people launder money.
How Money Laundering Works
Stages of Money Laundering
The Placement stage is the most challenging stage of the laundering process, at this stage the launderer can be caught trying to get rid of their illicit proceeds. Some methods used are loan repayment, currency exchange and gambling. An example of the placement stage is Smurfing.
- Smurfing/Structuring: This is the process of breaking up the transaction into smaller amounts. A Source of Funds Declaration Form must be completed for all transactions over the threshold ($90,000TTD). The launderer will try to circumvent this process by breaking up the transaction into smaller amounts and finding persons who would assist in this process.
The Layering stage is most complex, the launderer attempts to confuse the original source of the funds. In many instances money service businesses are used to transfer these funds to other countries in an attempt to confuse the money trail.
The Integration stage is when the funds are being converted to what appears to be a legitimate business. After the launderer is successful in placing the money into the financial system and confusing the process by layering, they can now do what appears to be everyday business.
Examples of Money Laundering
EXAMPLES OF MONEY LAUNDERING
Courtesy the Trinidad Guardian Online (2015) (Full Report: http://www.guardian.co.tt/news/2015-06-07/fifa-corruption-documents-show-details-jack-warner-bribes )
A BBC investigation has seen evidence that details what happened to the $10m sent from Fifa to accounts controlled by former vice-president Jack Warner. The money, sent on behalf of South Africa, was meant to be used for its Caribbean diaspora legacy programme.
But documents suggest Mr Warner used the payment for cash withdrawals, personal loans and to launder money. In the three transactions - on 4 January, 1 February and 10 March 2008 - funds totalling $10m (£6.5m) from Fifa accounts were received into Concacaf accounts controlled by Jack Warner.
Reports revealed that JTA Supermarkets, a large chain in Trinidad, received $4,860,000 from the accounts. The money was paid in instalments from January 2008 to March 2009. The largest payment was $1,350,000 paid in February 2008. US prosecutors say the money was mostly paid back to Mr Warner in local currency.
Courtesy Stabroeknews Online-Pilot held with US$620,000 has private hangar at Timehri (2014) (Full Report: http://www.stabroeknews.com/2014/news/stories/11/27/pilot-held-us620000-private-hangar-timehri/)
The aircraft on which US$620,000 was found in Puerto Rico last week was registered in the United States but it was based in a private hangar at the Cheddi Jagan International Airport (CJIA), Timehri owned by businessman/pilot implicated in the haul, Kem Khamraj Lall.
Lall, who is also a businessman and owns a gas station in Guyana, is now detained in a Puerto Rican jail following his initial court appearance before Magistrate Judge Marcos E. Lopez. During the hearing he was provided with a copy of the complaint and another hearing was set for December 1st where it would be determined whether Lall, a US citizen, was to remain in custody. The charge against Lall read that he knowingly concealed more than US$10, 000 in currency; to wit over US$600,000 and other monetary instruments in a plastic trash bag covered with a blanket under an exit seat of the plane and in an article of luggage, and attempted to transport and transfer such currency and monetary instruments from San Juan, Puerto Rico, a place within the US, to Guyana.
In 1996, Harvard educated Franklin Jurado pleaded guilty to laundering $36 million on behalf of Colombian drug lord José Santacruz-Londoño. Using his economic smarts, Jurado moved the cocaine profits far and wide in an effort to make them seem like legitimate earnings. After being funnelled through various European banks and companies, the funds would eventually make their way back to Santacruz-Londoño’s businesses in Colombia. Eventually, a bank collapse in Monaco highlighted Jurado’s connection to several accounts. An extremely noisy bank counting machine at his house in Luxembourg did not help his cause, either. He was sentenced to seven-and-a-half years in jail.
A money launderer purchased marine property and casualty insurance for a phantom ocean-going vessel. He paid large premiums on the policy and suborned the intermediaries so that regular claims were made and paid. However, he was very careful to ensure that the claims were less than the premium payments, so that the insurer enjoyed a reasonable profit on the policy. In this way, the money launderer was able to receive claims cheques which could be used to launder funds. The funds appeared to come from a reputable insurance company, and few questioned the source of the funds having seen the name of the company on the cheque or wire transfer.
The best known of America’s mobsters was at the forefront of the birth of modern money laundering schemes. It is estimated that he laundered $1 billion through various businesses. His first businesses were in fact laundromats, which, being cash operated, were very helpful in hiding and disguising illegal gains. The fact that Capone made use of the laundry trade is frequently given as the origin for the phrase “laundering” — however this is still subject to debate. Capone was eventually indicted in 1931 for a different financial crime: tax evasion.
Place the stages of Money laundering in the correct order