Money Laundering means concealment of the origins of illegally obtained money, by means of transfer through foreign banks or through legitimate business houses.
It is defined as any act, or attempted act, to conceal or disguise, the identity of illegally obtained funds; so that they appear to have originated from legitimate & legal sources.
Money Laundering also means the use of money from illegal activities by concealing the identity of individuals who obtained the money or the means by which it was obtained & converting into assets that appear to have come from a legitimate & legal source. In other words, it is the process used by criminals (by means, such as drug trafficking or terrorist activity ) or tax evaders through which they make ‘illegal’ transactions to appear as ‘legal’.
This act, impact legal / legitimate businesses. As the persons involve in this type of activity always offer the goods & services at the less than market price.
Tactics / how the money is laundered :
Smurfing : Where a person break a large chunk of cash into multiple small deposits, which are spread out over many accounts (may be of family or outsiders) to avoid detection.
Currency Exchanges or cash smuggling : Smuggling large chunk of cash across border to deposit them in offshore accounts to avoid detection & avoid taxes.
Recent instrument used in news was crypto currency viz. Bitcoin, which everyone is aware of.
What is Anti-money laundering (AML) :
Anti-money laundering (AML) is a term mainly used in financial & legal industries to describe the legal controls that require banks, financial institutions & other regulated entities to prevent detect & report money laundering activities.
AML guidelines come into prominence globally as a result of the formalization of the Financial Action Task Force (FAIF) & the promulgation of an international framework of Anti-money laundering standards.
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