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Money laundering

Money laundering . What is money laundering?. It is a process of making dirty money clean. Money is moved around the financial system again and again in such a manner that its origin gets hidden. Money generated from illegitimate source is converted into that derived from a legitimate source .

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Money laundering

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  1. Money laundering

  2. What is money laundering? • It is a process of making dirty money clean. • Money is moved around the financial system again and again in such a manner that its origin gets hidden. • Money generated from illegitimate source is converted into that derived from a legitimate source .

  3. What is money laundering? • The process by which large amounts of illegally obtained money are given the appearance of having originated from a legitimate source. • The conversion of profits derived from illegal activities into financial assets which consequently appear to have legitimate origin.

  4. What is money laundering? • Money laundering may be defined as, processing through the banking system, of the proceeds of crime in order to disguise their illegal origin.

  5. Stages of money laundering • The laundering process is often described as taking place in three stages. • Placement: entry of funds in banking system. • Layering: distancing of funds from the point of entry. • Integration: usage of funds.

  6. Stages of money laundering. • Placement:( injection or pre washing) • Placement, being the first stage is the means by which funds derived from a criminal activity are introduced into the financial system, either directly or through using other retail businesses. This can be in the form of a large sums of cash or a series of smaller sums.

  7. how is money laundered? • Stage 1 (placement) • Funds are laundered close to the under lying criminal activity. • Large amounts are split into small sums and • Deposited into bank accounts or • Used to buy instruments in the name of front men and • Collected through accounts at other locations

  8. Stages of money laundering • Layering (stacking or washing) • The aim of the second stage is to disguise the transaction through a succession of complex financial transaction with the purpose of erasing as quickly as possible all links with it unlawful origin. The funds may be converted into shares, bonds or any other easily negotiable asset or may be transferred to other accounts in other jurisdictions.

  9. How is money laundered? • Stage 2 layering • Conversions/transfer to distance funds from source by: • Purchase of assets (often real estate) in the name of launderer’s front men. • A series of funds transfers through accounts at various banks across the globe. • Use of scattered bank accounts for money laundering. • Disguising funds transfers as payment for goods or services, giving them a legitimate appearance.

  10. Stages of money laundering • Integration (recycling) • Complex integration schemes then place the laundering funds back in to the economy through real estate, business assets, securities and equities in such a way that they re enter the financial system appearing as normal business funds that have been legitimately earned.

  11. How is money laundered? • Stage 3 ( integration) • Re-entry of laundered funds into white economy. • Having laundered the funds, the launderers then move them back into white economy as their legitimate owners by investing them in • Real estate • Luxury assets • Businesses.

  12. Offence of money laundering • A person shall be guilty of offence of money laundering, if the person- • Acquires, converts, possesses, uses or transfers property, knowing or having reason to believe that such property is proceeds of crime. • Conceals or disguises the true nature, original location, true character , ownership of property, knowing or having reason to believe ,that such property is proceeds of crimes. • Holds, or possesses on behalf of any other person any property knowing or having reason to believe that such property is proceeds of crime.

  13. Classification of offences • Assisting another person in retaining the benefits of crime. • Acquiring, possession, and use of criminal proceeds. • Concealment/transfer of funds to avoid detection. • Failure to disclose knowledge or suspicion of a foul transaction.

  14. What does the activity constitute? • All acts of washing dirty money to make it seem like clean, legally generated money. • Money earned from illegal enterprises or activities is moved through institutions engaged in legal business to change money’s character from illegal to legally earned money. • The movement could be between countries or within the same country.

  15. Unfortunately financial institutions, mostly banks, are used by criminals to move dirty money back and forth to hide its • Origin • Ownership • Character Making it look like legally earned/ received money. • Logically institutions hurt most by this criminal activity are also banks.

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