Crime Solicitors

The idea behind money laundering is that criminals can effectively disguise the origins of the money they steal in one way or another. The criminal group generates an illegal profit and it is essential for their unhindered enjoyment of that profit that its origins be disguised in some way.

Astronomical proceeds are generated every year by organised crime such as drug trafficking, prostitution, smuggling and illegal arms sales. There are also white-collar crimes such as insider trading, computer fraud and embezzlement that also create enormous profits and create an incentive to launder gains and disguise the origins of ill-gotten money.

Criminals work hard to avoid attracting attention to their money management activities and ways of doing this include changing the form of the funds, disguising their origins and moving them to locations where they are unlikely to attract unwanted interest.

There has been a co-ordinated international response to the increasing money laundering activities around the globe that have become worse, since the explosion in information systems and technological advances have allowed much more leeway for the criminals to cover their tracks. The Financial Action Task Force was set up in 1989 at the Paris G-7 Summit to combat money laundering and has 40 recommendations to help governments tackle the problem.

The first step in money laundering is to get the illegal profits into a financial system. One of the simplest ways of achieving this is to split up large sums of cash into smaller amounts that are far less conspicuous and which can then be deposited into a regular bank account, or used to buy cheques or money orders that can then be put into accounts elsewhere.

The ‘layering stage’ is the second part of any money laundering operation, when the launderer takes certain actions to further distance the illegal funds from their source. The sale and purchase of investment instruments is one way of doing this, or sending the funds electronically to locations and bank accounts scattered across the globe, making tracing extremely complex or impossible. This last is especially popular in countries that do not have a history of co-operation in anti-laundering operations.

In the final, ‘integration’, stage the launderer transfers the funds into the mainstream financial system or legitimate economy, and is then free to invest them in business ventures, assets and property.

If money laundering is allowed to go unchecked, it can have serious consequences for society, because organised criminals by infiltrating financial institutions can thereby gain control over them through investment and the bribery of officials and politicians. The social fabric can be severely weakened by these activities, which also have a detrimental effect on ethical standards and democratic institutions. The transition of countries in the process of moving to democratic systems can be fatally affected by large scale money laundering and the corruption it brings in its wake.

If you have questions about money laundering or any related activities, contact Duncan Lewis or other crime solicitors for help and advice.