Definition of Money Laundering

The concept of money laundering is closely related to organized criminal groups, for example mafias, cartels, etc.

As its name suggests, the fundamental idea of ​​money laundering is to transform profits economic activity of an illegal activity, in such a way that the "dirty" and illegal money can be cleaned, that is, whiten.

Mechanisms in money laundering

Money laundering begins with the placing of illicit money (for example, from drug trafficking or prostitution networks) in the Finance system legal. So that the money is not suspicious, the amounts are divided into small deposits and in different banking entities. Other strategy to hide the illicit money is to mix the amounts obtained in the bank accounts of real companies and with a normalized activity.

If the volume of money to be laundered is very high, an entity is chosen financial opaque and free from conventional banking controls. These entities that receive the money are known as tax havens.

The transport

The money can be made through specialized intermediaries or by including the money in a shipment of goods.

The income of illicit origin can be used for financial products with high liquidity or used to purchase high-value goods.

One of the keys to money laundering is to remove the origin of the money from its final destination as far as possible, for which it resorts to front entities, financial shelters, etc. With these actions of engineering It is intended to erase the money trail and thus be able to continue with the illegal activities that generate it.

The capital laundered through complex financial systems manages to have a appearance legal and is at the provision of other legal entities, many of them created precisely in order to make money laundering as effective as possible.

The legislation that protects bank secrecy makes it very difficult to detect money laundering operations.

Money Laundering Issues