Money laundering is an illegal act wherein a person earns a significant amount of money through a criminal activity. It is commonly associated with drug trafficking and terrorist funding. The main goal of this process is to make dirty money look clean, thus the term “laundering.”
Money launderers use different techniques to make ill-gotten funds look clean and legal. People working for criminal organizations, for instance, strategically do transactions without the financial institutions detecting their activities. According to money laundering lawyer in Hong Kong, banking companies are required by the law to report transactions involving huge amounts of money as well as those that involve suspicious acts that could be associated with money laundering. However, money launderers apply smart tactics so that financial institutions could not detect their activities. They use very complex means to make transactions look legitimate, but here are the most basic steps they take to accomplish this:
Placement or initial entry is the process of placing money gained from criminal act into a legitimate financial institution.
In this step, the transfer of money continues through various transactions, investments, or businesses. This is done to make it hard for the authorities to trace the illegal source of the fund.
Finally, the “laundered” money is withdrawn from a legitimate account and can now be used legally to however the person wishes.
Furthermore, the popularity of online banking has helped money launderers to get away with their crime even easier. Other than online banking services, anonymous online payment services and mobile money transfers made it even more complicated to detect illegal transactions. Many launderers also use cryptocurrencies for different money laundering-related acts such as blackmailing and drug trading. This is due to the anonymity of the transactions.
Governments need to beef up their regulations to prevent money laundering. With stricter surveillance and active collaboration with financial institutions, money laundering schemes can be put to a stop.
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