Money laundering Example, is the root of all the major financial threats as it exploits fund tracking and transactional management operations. These financial discrepancies complicate the risk management and regulatory compliance modules. For this reason, the money laundering risk index rose to 5.83 points in 2019 in Colombia.
Throughout international financial history, organizations have faced multiple examples of money laundering through different channels. These money laundering examples show the different tactics used by imposters for the facilitation of illicit fund movement. Therefore, a streamlined AML check is critical to reduce the volume and threats of these operations.
The Concept of Money Laundering Scheme – An Investigation of the Criminal Process
Money laundering is the most common financial threat that is the foundation of various criminal activities. It is the practice of acquiring illicit funds unethically while concealing their origin and sources. Imposters use these illicit funds to facilitate several unauthorized operations, including bribery, embezzlement, and drug trafficking. The various money laundering examples are usually facilitated through three different stages, which are briefly discussed below:
- Placement Money Laundering Example: The initial money stage deals with the introduction of illicit funds into the financial system through smaller transactional practices. For instance, money acquired through drug trafficking is introduced into the financial system through minimal deposits.
- Layering Money Laundering Example: The second money stage deals with the facilitation of multiple transactional activities across different bank accounts. For instance, imposters engage in multiple trade transactions to conceal the source of illicit funds.
- Integration Money Laundering Example: The last laundering stage involves the integration of illegal funds in legitimate financial structures through legal business investments and real estate property purchases.
Understand the Various Examples of Money Laundering – An Analysis
Money laundering is an evolving crime that is exploiting the legal framework of many economies. Some of the most prominent and pertaining money laundering examples are as follows:
- Trade-based money laundering is the most recurring example of financial discrepancies as it involves the trading of illicitly acquired funds and asset integration.
- Money laundering through smurfing is also a common act adopted by financial imposters in terms of market manipulation and exploitation. Smurfing allows the imposters to disguise their illicit sources by staying just below the transactional threshold amount.
- The real estate industry is the most exploited sector that is vulnerable to the facilitation of money laundering practices. Imposters often invest illicit funds into real-estate property.
Offenses of Money Laundering Schemes Under Legal Regulatory Framework
Under the United Kingdom’s Proceeds of Crime Act, the regulatory authorities have highlighted 3 main offenses that are concerned with money laundering practices. These are:
- Concealing is the first offense, which involves all the activities where any individual or organization tries to conceal or hide their illicit financial gains and their sources.
- The second offense is referred to as arranging. This offense involves the facilitation of money laundering practices through different parties and on their behalf. For instance, when imposters ask other entities to deposit their funds into their legitimate accounts, it is an arranging offense under the law.
- The last offense is related to acquisitions and possession purposes. This includes the utilization of these illegal funds for their own personal use.
How Different Sectors are Exploited During Money Laundering Techniques
Money launderers have always exploited various sectors to facilitate illicit financial operations and non-regulatory operations. Throughout financial history, various shell and offshore companies were exploited by the money launderers as these accounts conceal their illicit practices.
Additionally, bulk cash smuggling through trading channels is considered to be an exploitative channel that is facilitated by criminals for money operations. These activities conceal the illicit cash transfers related to the financial exploitation operations.
Detecting Money Laundering With Updated AML Compliance Programs
Now that we have analyzed the different laundering examples and the channels used for these operations, it is necessary to also identify the identification channels that stimulate the detection and rectification of these operations. The rectification of money practices relies on the adaptation of AML regulations.
These regulations focus on the incorporation of customer due diligence and risk management operations during the on boarding procedures. In addition, effective anti-laundering regulations revolve around the screening of all potential criminals against several watch lists, such as PEP and sanction lists. Therefore, adherence to AML regulations is necessary for the effectiveness of financial operations and regulatory stability.
Concluding Remarks
Money laundering is a recurring crime that exploits the overall functioning and credibility of financial operations. These operations result in the exploitation of an organization’s reputation and credibility. Over time, several money laundering examples have been observed that reveal the different channels that are usually exploited for illicit operations. Therefore, a detailed and thorough anti-money laundering strategy is necessary to facilitate the detection and rectification of these criminals. These screening operations ensure an effective identification of all the entities involved in unauthorized and unethical financial practices.
