Q 1. What is money laundering and how is money laundered?
Money laundering in simple terms is cleaning of dirty money. There are
various complex methods employed to launder money , all of them are
based on the three fundamental processes Placement, Layering,
Integration. Depending on the need these processes are employed.
According to Black’s law, lexicon dictionary, Money laundering is
converting illegitimate money into legitimate money by concealing the
actual source of money and thereby making it look like money obtained
by legitimate means.
Prominent Methods involved are Smurfing, Overseas banks , Investing in
Shell companies as well as legitimate businesses.
Smurfing : Smurfing involves breaking down of large sums of money into
smaller sums that the reporting requirements of a particular country
so as to avoid scrutiny.
Overseas banks: Some nations offers extremely high level of
confidentiality as per their Bank secrecy norms which are used to
their advantage. They also have very lax know your customer norms and
allow huge sum transactions without any regard for its actual source.
Investing : Investing in legitimate Businesses as well as shell
companies have also been used to launder money.
Alternative financial systems / Hawala transactions : A method in
which money is transferred without the actual transfer of cash, it is
based on Trust and codes.
Money laundering has been hugely detrimental and is promoting crime
and allowing criminals flourish. Countries should take steps to curb
this menace, ratifying the UN Convention against Corruption and
International Convention for the Suppression of the Financing of
Terrorism and enacting stringent banking laws and enforcing stricter
know your customer norms would be a good place to begin with.
Q 2. What is the linkage between Money Laundering and corruption ?
Corruption has become an important source of illegal
money and is rampant across the administration and management in
petty as well as grand levels affecting economic growth and
increasing global poverty. The illegal money thus obtained necessitates
cleaning of this illegal money to bring it into the mainstream .
Q 3. What are the techniques of Money Laundering ?
The techniques used for money laundering are
principally involves
Placement : The illegal money is placed into the legitimate financial
system by different means like smurfing, buying liquid assets like
gold, painting, and antique articles.
Layering : The money is layered through several level of complex transactions.
Integration : This money is routed back to the individual and
projected as obtained by legitimate means and is integrated with his
wealth.
Q 4. Narco Terrorism and terror financing?
The term narco terrorism refers to terrorists using
terrorist tactics to support drug operations against competitors and
government agencies and terror financing is using drug trade profits
to finance terrorism. Terrorist organisations like Al Qaida depend
primarily on the money obtained by smuggling drugs like opium and
heroin for financing their terror activities.
based on the three fundamental processes Placement, Layering,
Integration. Depending on the need these processes are employed.
According to Black’s law, lexicon dictionary, Money laundering is
converting illegitimate money into legitimate money by concealing the
actual source of money and thereby making it look like money obtained
by legitimate means.
Prominent Methods involved are Smurfing, Overseas banks , Investing in
Shell companies as well as legitimate businesses.
Smurfing : Smurfing involves breaking down of large sums of money into
smaller sums that the reporting requirements of a particular country
so as to avoid scrutiny.
Overseas banks: Some nations offers extremely high level of
confidentiality as per their Bank secrecy norms which are used to
their advantage. They also have very lax know your customer norms and
allow huge sum transactions without any regard for its actual source.
Investing : Investing in legitimate Businesses as well as shell
companies have also been used to launder money.
Alternative financial systems / Hawala transactions : A method in
which money is transferred without the actual transfer of cash, it is
based on Trust and codes.
Money laundering has been hugely detrimental and is promoting crime
and allowing criminals flourish. Countries should take steps to curb
this menace, ratifying the UN Convention against Corruption and
International Convention for the Suppression of the Financing of
Terrorism and enacting stringent banking laws and enforcing stricter
know your customer norms would be a good place to begin with.
Q 2. What is the linkage between Money Laundering and corruption ?
Corruption has become an important source of illegal
money and is rampant across the administration and management in
petty as well as grand levels affecting economic growth and
increasing global poverty. The illegal money thus obtained necessitates
cleaning of this illegal money to bring it into the mainstream .
Q 3. What are the techniques of Money Laundering ?
The techniques used for money laundering are
principally involves
Placement : The illegal money is placed into the legitimate financial
system by different means like smurfing, buying liquid assets like
gold, painting, and antique articles.
Layering : The money is layered through several level of complex transactions.
Integration : This money is routed back to the individual and
projected as obtained by legitimate means and is integrated with his
wealth.
Q 4. Narco Terrorism and terror financing?
The term narco terrorism refers to terrorists using
terrorist tactics to support drug operations against competitors and
government agencies and terror financing is using drug trade profits
to finance terrorism. Terrorist organisations like Al Qaida depend
primarily on the money obtained by smuggling drugs like opium and
heroin for financing their terror activities.
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