Anti-money Laundering
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Money laundering is the process of concealing the origin of money, obtained from illicit activities such as
drug trafficking A drug is any chemical substance that causes a change in an organism's physiology or psychology when consumed. Drugs are typically distinguished from food and substances that provide nutritional support. Consumption of drugs can be via insuffla ...
,
corruption Corruption is a form of dishonesty or a criminal offense which is undertaken by a person or an organization which is entrusted in a position of authority, in order to acquire illicit benefits or abuse power for one's personal gain. Corruption m ...
,
embezzlement Embezzlement is a crime that consists of withholding assets for the purpose of conversion of such assets, by one or more persons to whom the assets were entrusted, either to be held or to be used for specific purposes. Embezzlement is a type ...
or
gambling Gambling (also known as betting or gaming) is the wagering of something of value ("the stakes") on a random event with the intent of winning something else of value, where instances of strategy are discounted. Gambling thus requires three el ...
, by converting it into a legitimate source. It is a crime in many
jurisdictions Jurisdiction (from Latin 'law' + 'declaration') is the legal term for the legal authority granted to a legal entity to enact justice. In federations like the United States, areas of jurisdiction apply to local, state, and federal levels. Jur ...
with varying definitions. It is usually a key operation of
organized crime Organized crime (or organised crime) is a category of transnational, national, or local groupings of highly centralized enterprises run by criminals to engage in illegal activity, most commonly for profit. While organized crime is generally th ...
. In US law, money laundering is the practice of engaging in financial transactions to conceal the identity, source, or destination of illegally gained money. In UK law the
common law In law, common law (also known as judicial precedent, judge-made law, or case law) is the body of law created by judges and similar quasi-judicial tribunals by virtue of being stated in written opinions."The common law is not a brooding omnipresen ...
definition is wider. The act is defined as "taking any action with property of any form which is either wholly or in part the proceeds of a crime that will disguise the fact that that property is the proceeds of a crime or obscure the beneficial ownership of said property". In the past, the term "money laundering" was applied only to financial transactions related to
organized crime Organized crime (or organised crime) is a category of transnational, national, or local groupings of highly centralized enterprises run by criminals to engage in illegal activity, most commonly for profit. While organized crime is generally th ...
. Today its definition is often expanded by government and international regulators such as the US
Office of the Comptroller of the Currency The Office of the Comptroller of the Currency (OCC) is an independent bureau within the United States Department of the Treasury that was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all nation ...
to mean "any financial transaction which generates an asset or a value as the result of an illegal act", which may involve actions such as
tax evasion Tax evasion is an illegal attempt to defeat the imposition of taxes by individuals, corporations, trusts, and others. Tax evasion often entails the deliberate misrepresentation of the taxpayer's affairs to the tax authorities to reduce the taxp ...
or
false accounting False accounting is a legal term for a type of fraud, considered a statutory offence in England and Wales, Northern Ireland and the Republic of Ireland. England and Wales This offence is created by section 17 of the Theft Act 1968 which provides: ...
. In the UK, it does not even need to involve money, but any
economic good In economics, goods are items that satisfy human wants and provide utility, for example, to a consumer making a purchase of a satisfying product. A common distinction is made between goods which are transferable, and services, which are not tran ...
. Courts involve money laundering committed by private individuals, drug dealers, businesses, corrupt officials, members of criminal organizations such as the
Mafia "Mafia" is an informal term that is used to describe criminal organizations that bear a strong similarity to the original “Mafia”, the Sicilian Mafia and Italian Mafia. The central activity of such an organization would be the arbitration of d ...
, and even states. As financial crime has become more complex, and
financial intelligence Financial intelligence (FININT) is the gathering of information about the financial affairs of entities of interest, to understand their nature and capabilities, and predict their intentions. Generally the term applies in the context of law enfo ...
has become more recognized in combating international crime and terrorism, money laundering has become more prominent in political, economic, and legal debate. Money laundering is
ipso facto is a Latin phrase, directly translated as "by the fact itself", which means that a specific phenomenon is a ''direct'' consequence, a resultant ''effect'', of the action in question, instead of being brought about by a previous action. It is a ...
illegal; the acts generating the money almost always are themselves criminal in some way (for if not, the
money Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are as ...
would not need to be laundered).


History

Laws against money laundering were created to use against organized crime during the period of
Prohibition in the United States In the United States from 1920 to 1933, a Constitution of the United States, nationwide constitutional law prohibition, prohibited the production, importation, transportation, and sale of alcoholic beverages. The alcohol industry was curtai ...
during the 1930s.
Organized crime Organized crime (or organised crime) is a category of transnational, national, or local groupings of highly centralized enterprises run by criminals to engage in illegal activity, most commonly for profit. While organized crime is generally th ...
received a major boost from Prohibition and a large source of new funds that were obtained from illegal sales of alcohol. The successful prosecution of
Al Capone Alphonse Gabriel Capone (; January 17, 1899 – January 25, 1947), sometimes known by the nickname "Scarface", was an American gangster and businessman who attained notoriety during the Prohibition era as the co-founder and boss of the ...
on
tax evasion Tax evasion is an illegal attempt to defeat the imposition of taxes by individuals, corporations, trusts, and others. Tax evasion often entails the deliberate misrepresentation of the taxpayer's affairs to the tax authorities to reduce the taxp ...
brought in a new emphasis by the state and law enforcement agencies to track and confiscate money, but existing laws against tax evasion could not be used once gangsters started paying their taxes. In the 1980s, the
war on drugs The war on drugs is a Globalization, global campaign, led by the United States federal government, of prohibition of drugs, drug prohibition, military aid, and military intervention, with the aim of reducing the illegal drug trade in the Unite ...
led governments again to turn to money laundering rules in an attempt to track and seize the proceeds of drug crimes in order to catch the organizers and individuals running drug empires. It also had the benefit, from a law enforcement point of view, of turning rules of evidence "upside down". Law enforcers normally have to prove an individual is guilty to seize their property, but with money laundering laws money can be confiscated and it is up to the individual to prove that the source of funds is legitimate to get the money back. This makes it much easier for law enforcement agencies and provides for much lower burdens of proof. However, this process has been abused by some law enforcement agencies to take and keep money without strong evidence of related criminal activity, to be used to supplement their own budgets. The
September 11 attacks The September 11 attacks, commonly known as 9/11, were four coordinated suicide terrorist attacks carried out by al-Qaeda against the United States on Tuesday, September 11, 2001. That morning, nineteen terrorists hijacked four commercia ...
in 2001, which led to the
Patriot Act The USA PATRIOT Act (commonly known as the Patriot Act) was a landmark Act of the United States Congress, signed into law by President George W. Bush. The formal name of the statute is the Uniting and Strengthening America by Providing Appropr ...
in the U.S. and similar legislation worldwide, led to a new emphasis on money laundering laws to combat
terrorism financing Terrorism financing is the provision of funds or providing financial support to individual terrorists or non-state actors. Most countries have implemented measures to counter terrorism financing (CTF) often as part of their money laundering la ...
. The
Group of Seven (G7) The Group of Seven (G7) is an intergovernmental political forum consisting of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States; additionally, the European Union (EU) is a "non-enumerated member". It is officiall ...
nations used the
Financial Action Task Force on Money Laundering The Financial Action Task Force (on Money Laundering) (FATF), also known by its French name, ''Groupe d'action financière'' (GAFI), is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat m ...
to put pressure on governments around the world to increase surveillance and monitoring of financial transactions and share this information between countries. Starting in 2002, governments around the world upgraded money laundering laws and surveillance and monitoring systems of financial transactions. Anti-money laundering regulations have become a much larger burden for
financial institution Financial institutions, sometimes called banking institutions, are business entities that provide services as intermediaries for different types of financial monetary transactions. Broadly speaking, there are three major types of financial insti ...
s and enforcement has stepped up significantly. During 2011–2015 a number of major banks faced ever-increasing fines for breaches of money laundering regulations. This included
HSBC HSBC Holdings plc is a British multinational universal bank and financial services holding company. It is the largest bank in Europe by total assets ahead of BNP Paribas, with US$2.953 trillion as of December 2021. In 2021, HSBC had $10.8 tri ...
, which was fined $1.9 billion in December 2012, and
BNP Paribas BNP Paribas is a French international banking group, founded in 2000 from the merger between Banque Nationale de Paris (BNP, "National Bank of Paris") and Paribas, formerly known as the Banque de Paris et des Pays-Bas. The full name of the grou ...
, which was fined $8.9 billion in July 2014 by the U.S. government. Many countries introduced or strengthened border controls on the amount of cash that can be carried and introduced central transaction reporting systems where all financial institutions have to report all financial transactions electronically. For example, in 2006, Australia set up the AUSTRAC system and required the reporting of all financial transactions.


Features


Definition

Money laundering is the conversion or transfer of property; the concealment or disguising of the nature of the proceeds; the acquisition, possession or use of property, knowing that these are derived from criminal acts; the participating in or assisting the movement of funds to make the proceeds appear legitimate. Money obtained from certain crimes, such as
extortion Extortion is the practice of obtaining benefit through coercion. In most jurisdictions it is likely to constitute a criminal offence; the bulk of this article deals with such cases. Robbery is the simplest and most common form of extortion, ...
,
insider trading Insider trading is the trading of a public company's stock or other securities (such as bonds or stock options) based on material, nonpublic information about the company. In various countries, some kinds of trading based on insider information ...
,
drug trafficking A drug is any chemical substance that causes a change in an organism's physiology or psychology when consumed. Drugs are typically distinguished from food and substances that provide nutritional support. Consumption of drugs can be via insuffla ...
, and
illegal gambling Gaming law is the set of rules and regulations that apply to the gaming or gambling industry. Gaming law is not a branch of law in the traditional sense but rather is a collection of several areas of law that include criminal law, regulatory law, c ...
is "dirty" and needs to be "cleaned" to appear to have been derived from legal activities, so that banks and other financial institutions will deal with it without suspicion. Money can be laundered by many methods that vary in complexity and sophistication. Money laundering typically involves three steps: The first involves introducing cash into the financial system by some means ("placement"); the second involves carrying out complex financial transactions to camouflage the illegal source of the cash ("layering"); and finally, acquiring wealth generated from the transactions of the illicit funds ("integration"). Some of these steps may be omitted, depending upon the circumstances. For example, non-cash proceeds that are already in the financial system would not need to be placed. According to the
United States Treasury Department The Department of the Treasury (USDT) is the Treasury, national treasury and finance department of the federal government of the United States, where it serves as an United States federal executive departments, executive department. The departme ...
:


Methods


List of methods

Money laundering can take several forms, although most methodologies can be categorized into one of a few types. These include "bank methods, smurfing lso known as structuring currency exchanges, and double-invoicing". Lawrence M. Salinger, ''Encyclopedia of white-collar & corporate crime: A – I, Volume 1'', page 78, , 2005. *
Structuring Structuring, also known as smurfing in banking jargon, is the practice of executing financial transactions such as making bank deposits in a specific pattern, calculated to avoid triggering financial institutions to file reports required by law ...
: Often known as ''smurfing'', is a method of placement whereby cash is broken into smaller deposits of money, used to defeat suspicion of money laundering and to avoid anti-money laundering reporting requirements. A sub-component of this is to use smaller amounts of cash to purchase bearer instruments, such as money orders, and then ultimately deposit those, again in small amounts. * Bulk cash smuggling: This involves physically smuggling cash to another jurisdiction and depositing it in a financial institution, such as an
offshore bank An offshore bank is a bank regulated under international banking license (often called offshore license), which usually prohibits the bank from establishing any business activities in the jurisdiction of establishment. Due to less regulation and ...
, that offers greater
bank secrecy Banking secrecy, alternately known as financial privacy, banking discretion, or bank safety,Guex (2000), p. 240 is a conditional agreement between a bank and its clients that all foregoing activities remain secure, confidential, and private. Mos ...
or less rigorous money laundering enforcement. * Cash-intensive businesses: In this method, a business typically expected to receive a large proportion of its revenue as cash uses its accounts to deposit criminally derived cash. This method of money laundering often causes organized crime and
corporate crime In criminology, corporate crime refers to crimes committed either by a corporation (i.e., a business entity having a separate legal personality from the natural persons that manage its activities), or by individuals acting on behalf of a corpor ...
to overlap. Such enterprises often operate openly and in doing so generate cash revenue from incidental legitimate business in addition to the illicit cash. In such cases the business will usually claim all cash received as legitimate earnings. Service businesses are best suited to this method, as such enterprises have little or no
variable cost Variable costs are costs that change as the quantity of the good or service that a business produces changes.Garrison, Noreen, Brewer. Ch 2 - Managerial Accounting and Costs Concepts, pp 48 Variable costs are the sum of marginal costs over all un ...
s and/or a large ratio between revenue and variable costs, which makes it difficult to detect discrepancies between revenues and costs. Examples are
parking structures A multistorey car park (British English, British and Singapore English) or parking garage (American English), also called a multistory, parking building, parking structure, parkade (mainly Canadian English, Canadian), parking ramp, parking ...
,
strip club A strip club is a venue where strippers provide adult entertainment, predominantly in the form of striptease or other Erotic dancing, erotic or exotic dances. Strip clubs typically adopt a nightclub or Bar (establishment), bar style, and can also ...
s,
tanning salon Indoor tanning involves using a device that emits ultraviolet radiation to produce a cosmetic tan. Typically found in tanning salons, gyms, spas, hotels, and sporting facilities, and less often in private residences, the most common device is a ho ...
s,
car wash A car wash, carwash, or auto wash is a facility used to clean the exterior, and in some cases the interior of motor vehicles. Car washes can be self-service, full-service (with attendants who wash the vehicle), or fully automated (possi ...
es,
arcade Arcade most often refers to: * Arcade game, a coin-operated game machine ** Arcade cabinet, housing which holds an arcade game's hardware ** Arcade system board, a standardized printed circuit board * Amusement arcade, a place with arcade games * ...
s,
bar Bar or BAR may refer to: Food and drink * Bar (establishment), selling alcoholic beverages * Candy bar * Chocolate bar Science and technology * Bar (river morphology), a deposit of sediment * Bar (tropical cyclone), a layer of cloud * Bar (u ...
s,
restaurants A restaurant is a business that prepares and serves food and drinks to customers. Meals are generally served and eaten on the premises, but many restaurants also offer take-out and food delivery services. Restaurants vary greatly in appearanc ...
,
casino A casino is a facility for certain types of gambling. Casinos are often built near or combined with hotels, resorts, restaurants, retail shopping, cruise ships, and other tourist attractions. Some casinos are also known for hosting live entertai ...
s, barber shops, DVD stores,
movie theaters A movie theater (American English), cinema (British English), or cinema hall ( Indian English), also known as a movie house, picture house, the movies, the pictures, picture theater, the silver screen, the big screen, or simply theater is a ...
, and
beach resort A seaside resort is a town, village, or hotel that serves as a vacation resort and is located on a coast. Sometimes the concept includes an aspect of official accreditation based on the satisfaction of certain requirements, such as in the German ' ...
s. * Trade-based laundering: This method is one of the newest and most complex forms of money laundering. This involves under- or over-valuing
invoice An invoice, bill or tab is a commerce, commercial document issued by a sales, seller to a buyer relating to a sale transaction and indicating the product (business), products, quantities, and agreed-upon prices for products or Service (economic ...
s to disguise the movement of money. For example, the art market has been accused of being an ideal vehicle for money laundering due to several unique aspects of art such as the subjective value of art works as well as the secrecy of auction houses about the identity of the buyer and seller. *
Shell companies A shell corporation is a company or corporation that exists only on paper and has no office and no employees, but may have a bank account or may hold passive investments or be the registered owner of assets, such as intellectual property, or s ...
and trusts: Trusts and shell companies disguise the true owners of money. Trusts and corporate vehicles, depending on the jurisdiction, need not disclose their true owner. Sometimes referred to by the slang term ''rathole'', though that term usually refers to a person acting as the fictitious owner rather than the business entity. * Round-tripping: Here, money is deposited in a
controlled foreign corporation Controlled foreign corporation (CFC) rules are features of an income tax system designed to limit artificial deferral of tax by using offshore low taxed entities. The rules are needed only with respect to income of an entity that is not currently ...
offshore, preferably in a
tax haven A tax is a compulsory financial charge or some other type of levy imposed on a taxpayer (an individual or legal entity) by a governmental organization in order to fund government spending and various public expenditures (regional, local, or n ...
where minimal records are kept, and then shipped back as a
foreign direct investment A foreign direct investment (FDI) is an investment in the form of a controlling ownership in a business in one country by an entity based in another country. It is thus distinguished from a foreign portfolio investment by a notion of direct co ...
, exempt from taxation. A variant on this is to transfer money to a law firm or similar organization as funds on account of fees, then to cancel the retainer and, when the money is remitted, represent the sums received from the lawyers as a legacy under a will or proceeds of litigation. * Bank capture: In this case, money launderers or criminals buy a controlling interest in a bank, preferably in a jurisdiction with weak money laundering controls, and then move money through the bank without scrutiny. *Invoice Fraud: An example is when a criminal contacts a company saying that the supplier payment details have changed. They then provide alternative, fraudulent details in order for you to pay them money. * Casinos: In this method, an individual walks into a casino and buys chips with illicit cash. The individual will then play for a relatively short time. When the person cashes in the chips, they will expect to take payment in a check, or at least get a receipt so they can claim the proceeds as gambling winnings. * Other gambling: Money is spent on gambling, preferably on high odds games. One way to minimize risk with this method is to bet on every possible outcome of some event that has many possible outcomes, so no outcome(s) have short odds, and the bettor will lose only the
vigorish Vigorish (also known as ''juice'', ''under-juice'', the ''cut'', the ''take'', the ''margin'', the ''house edge'' or simply the ''vig'') is the fee charged by a bookmaker (or ''bookie'') for accepting a gambler's wager. In American English, it can ...
and will have one or more winning bets that can be shown as the source of money. The losing bets will remain hidden. * Black salaries: A company may have unregistered employees without written contracts and pay them cash salaries. Dirty money might be used to pay them. * Tax amnesties: For example, those that legalize unreported assets and cash in tax havens. *Transaction Laundering: When a merchant unknowingly processes illicit credit card transactions for another business. It is a growing problem and recognised as distinct from traditional money laundering in using the payments ecosystem to hide that the transaction even occurred (e.g. the use of fake front websites). Also known as "undisclosed aggregation" or "factoring". * Online job marketplaces such as
Freelancer.com Freelancer is an Australian freelance marketplace website, which allows potential employers to post jobs that freelancers can then bid to complete. Founded in 2009, its headquarters is located in Sydney, Australia, though it also has offices in V ...
and
Fiverr Fiverr is a global online marketplace for freelance services. Fiverr’s platform connects freelancers (sellers) to people or businesses looking to hire (buyers). Listings on Fiverr are diverse and range from "get a well-designed business card" ...
, which accept funds from clients and hold them in escrow to pay freelancers. A money launderer can post a token job on one of these sites, and send the money for the site to hold in escrow. The launderer (or his associate) can then sign on as a freelancer (using a different account and IP address), accept and complete the job, and be paid the funds.


Digital electronic money

In theory,
electronic money Digital currency (digital money, electronic money or electronic currency) is any currency, money, or money-like asset that is primarily managed, stored or exchanged on digital computer systems, especially over the internet. Types of digital cu ...
should provide as easy a method of transferring value without revealing identity as untracked banknotes, especially wire transfers involving anonymity-protecting numbered bank accounts. In practice, however, the record-keeping capabilities of Internet service providers and other network resource maintainers tend to frustrate that intention. While some
cryptocurrencies A cryptocurrency, crypto-currency, or crypto is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank A bank is a financial i ...
under recent development have aimed to provide for more possibilities of transaction anonymity for various reasons, the degree to which they succeed—and, in consequence, the degree to which they offer benefits for money laundering efforts—is controversial. Solutions such as ZCash and
Monero Monero (; Abbreviation: XMR) is a decentralized cryptocurrency. It uses a public distributed ledger with privacy-enhancing technologies that obfuscate transactions to achieve anonymity and fungibility. Observers cannot decipher addresses tradi ...
are examples of cryptocurrencies that provide unlinkable anonymity via proofs and/or obfuscation of information (
ring signature In cryptography, a ring signature is a type of digital signature that can be performed by any member of a set of users that each have keys. Therefore, a message signed with a ring signature is endorsed by someone in a particular set of people. On ...
s). Such currencies could find use in online illicit services. In 2013, Jean-Loup Richet, a research fellow at
ESSEC The École Supérieure des Sciences Economiques et Commerciales (more commonly ESSEC Business School or ESSEC) is a major French business and management school, with non-profit association status (French association law of 1901) founded in 1907 ...
ISIS, surveyed new techniques that cybercriminals were using in a report written for the
United Nations Office on Drugs and Crime The United Nations Office on Drugs and Crime (UNODC; French: ''Office des Nations unies contre la drogue et le crime'') is a United Nations office that was established in 1997 as the Office for Drug Control and Crime Prevention by combining the ...
. A common approach was to use a
digital currency exchanger A cryptocurrency exchange, or a digital currency exchange (DCE), is a business that allows customers to trade cryptocurrencies or digital currencies for other assets, such as conventional fiat money or other digital currencies. Exchanges may acce ...
service which converted dollars into a digital currency called
Liberty Reserve Liberty Reserve was a Costa Rica-based centralized digital currency service that billed itself as the "oldest, safest and most popular payment processor, serving millions all around a world". The site had over one million users when it was shut ...
, and could be sent and received anonymously. The receiver could convert the Liberty Reserve currency back into cash for a small fee. In May 2013, the US authorities shut down Liberty Reserve charging its founder and various others with money laundering. Another increasingly common way of laundering money is to use online gaming. In a growing number of online games, such as ''
Second Life ''Second Life'' is an online multimedia platform that allows people to create an avatar for themselves and then interact with other users and user created content within a multi player online virtual world. Developed and owned by the San Fra ...
'' and ''
World of Warcraft ''World of Warcraft'' (''WoW'') is a massively multiplayer online role-playing game (MMORPG) released in 2004 by Blizzard Entertainment. Set in the ''Warcraft'' fantasy universe, ''World of Warcraft'' takes place within the world of Azeroth ...
,'' it is possible to convert money into virtual goods, services, or virtual cash that can later be converted back into money. To avoid the usage of decentralized digital money such as
Bitcoin Bitcoin ( abbreviation: BTC; sign: ₿) is a decentralized digital currency that can be transferred on the peer-to-peer bitcoin network. Bitcoin transactions are verified by network nodes through cryptography and recorded in a public distr ...
for the profit of crime and corruption, Australia is planning to strengthen the nation's anti-money laundering laws. The characteristics of Bitcoin—it is completely deterministic, protocol based and can be difficult to censor—make it possible to circumvent national laws using services like
Tor Tor, TOR or ToR may refer to: Places * Tor, Pallars, a village in Spain * Tor, former name of Sloviansk, Ukraine, a city * Mount Tor, Tasmania, Australia, an extinct volcano * Tor Bay, Devon, England * Tor River, Western New Guinea, Indonesia Sc ...
to obfuscate transaction origins. Bitcoin relies completely on cryptography, not on a central entity running under a KYC framework. There are several cases in which criminals have cashed out a significant amount of Bitcoin after ransomware attacks, drug dealings, cyber fraud and gunrunning. However, many digital currency exchanges are now operating KYC programs under threat of regulation from the jurisdictions they operate in.


Reverse money laundering

Reverse money laundering is a process that disguises a legitimate source of funds that are to be used for illegal purposes. It is usually perpetrated for the purpose of financing terrorism but can be also used by criminal organizations that have invested in legal businesses and would like to withdraw legitimate funds from official circulation. Unaccounted cash received via disguising financial transactions is not included in official financial reporting and could be used to evade taxes, hand in bribes and pay "under-the-table" salaries. For example, in an affidavit filed on 24 March 2014 in United States District Court, Northern California, San Francisco Division, FBI special agent Emmanuel V. Pascau alleged that several people associated with the
Chee Kung Tong The Chee Kung Tong (), or Gee Kung Tong, was a Chinese secret society established in 1880 and holds an active presence still. In earlier years, the society has also been recognized as the "Chinese Masons" and has been identified under various names ...
organization, and California State Senator
Leland Yee Leland Yin Yee (, born November 20, 1948) is an American former politician who served as a member of the California State Senate for District 8, which covered parts of San Francisco and the Peninsula. In 2015, Yee pleaded guilty to felony racket ...
, engaged in reverse money laundering activities. The problem of such fraudulent encashment practices (''obnalichka'' in Russian) has become acute in Russia and other countries of the former Soviet Union. The Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG) reported that the Russian Federation, Ukraine, Turkey, Serbia, Kyrgyzstan, Uzbekistan, Armenia and Kazakhstan have encountered a substantial shrinkage of tax base and shifting money supply balance in favor of cash. These processes have complicated planning and management of the economy and contributed to the growth of the
shadow economy A black market, underground economy, or shadow economy is a clandestine market or series of transactions that has some aspect of illegality or is characterized by noncompliance with an institutional set of rules. If the rule defines the s ...
.


Magnitude

Many regulatory and governmental authorities issue estimates each year for the amount of money laundered, either worldwide or within their national economy. In 1996, a spokesperson for the IMF estimated that 2–5% of the worldwide global economy involved laundered money. The
Financial Action Task Force on Money Laundering The Financial Action Task Force (on Money Laundering) (FATF), also known by its French name, ''Groupe d'action financière'' (GAFI), is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat m ...
(FATF), an intergovernmental body set up to combat money laundering, stated, "Due to the illegal nature of the transactions, precise statistics are not available and it is therefore impossible to produce a definitive estimate of the amount of money that is globally laundered every year. The FATF therefore does not publish any figures in this regard." Academic commentators have likewise been unable to estimate the volume of money with any degree of assurance. Various estimates of the scale of global money laundering are sometimes repeated often enough to make some people regard them as factual—but no researcher has overcome the inherent difficulty of measuring an actively concealed practice. Regardless of the difficulty in measurement, the amount of money laundered each year is in the billions of US dollars and poses a significant policy concern for governments. As a result, governments and international bodies have undertaken efforts to deter, prevent, and apprehend money launderers. Financial institutions have likewise undertaken efforts to prevent and detect transactions involving dirty money, both as a result of government requirements and to avoid the reputational risk involved. Issues relating to money laundering have existed as long as there have been large scale criminal enterprises. Modern anti-money laundering laws have developed along with the modern
War on Drugs The war on drugs is a Globalization, global campaign, led by the United States federal government, of prohibition of drugs, drug prohibition, military aid, and military intervention, with the aim of reducing the illegal drug trade in the Unite ...
. In more recent times anti-money laundering legislation is seen as adjunct to the financial crime of
terrorist financing Terrorism financing is the provision of funds or providing financial support to individual terrorists or non-state actors. Most countries have implemented measures to counter terrorism financing (CTF) often as part of their money laundering l ...
in that both crimes usually involve the transmission of funds through the financial system (although money laundering relates to where the money has come ''from'', and terrorist financing relating to where the money is going ''to''). Transaction laundering is a massive and growing problem. Finextra estimated that transaction laundering accounted for over $200 billion in the US in 2017 alone, with over $6 billion of these sales involving illicit goods or services, sold by nearly 335,000 unregistered merchants.


Combating

Anti-money laundering (AML) is a term mainly used in the financial and legal industries to describe the legal controls that require
financial institution Financial institutions, sometimes called banking institutions, are business entities that provide services as intermediaries for different types of financial monetary transactions. Broadly speaking, there are three major types of financial insti ...
s and other regulated entities to prevent, detect, and report money laundering activities. Anti-money laundering guidelines came into prominence globally as a result of the formation of the
Financial Action Task Force The Financial Action Task Force (on Money Laundering) (FATF), also known by its French name, ''Groupe d'action financière'' (GAFI), is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat m ...
(FATF) and the promulgation of an international framework of anti-money laundering standards. These standards began to have more relevance in 2000 and 2001, after FATF began a process to publicly identify countries that were deficient in their anti-money laundering laws and international cooperation, a process colloquially known as "
name and shame To name and shame is to "publicly say that a person, group or business has done something wrong". It is a form of public shaming used to rally popular opinion against and in turn discourage certain kinds of behavior or enterprises. The practice o ...
". An effective AML program requires a jurisdiction to criminalise money laundering, giving the relevant regulators and police the powers and tools to investigate; be able to share information with other countries as appropriate; and require financial institutions to identify their customers, establish risk-based controls, keep records, and report suspicious activities. Strict background checks are necessary to combat as many money launderers escape by investing through complex ownership and company structures. Banks can do that but proper surveillance is required on the government side to reduce this. Over recent years, the rise in anti-money laundering mechanisms has been attributed to the use of
big data Though used sometimes loosely partly because of a lack of formal definition, the interpretation that seems to best describe Big data is the one associated with large body of information that we could not comprehend when used only in smaller am ...
and
artificial intelligence Artificial intelligence (AI) is intelligence—perceiving, synthesizing, and inferring information—demonstrated by machines, as opposed to intelligence displayed by animals and humans. Example tasks in which this is done include speech re ...
. Traditional anti-money laundering systems are falling behind against evolving threats and new technologies are helping AML compliance officers to deal with: poor implementation, expanding regulation, administrative complexity, false positives.


Criminalization

The elements of the crime of money laundering are set forth in the
United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances The United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances of 1988 is one of three major drug control treaties currently in force. It provides additional legal mechanisms for enforcing the 1961 Single Con ...
and
Convention against Transnational Organized Crime The United Nations Convention Against Transnational Organized Crime (UNTOC, also called the Palermo Convention) is a 2000 United Nations-sponsored multilateral treaty against transnational organized crime. History The convention was adopted by a r ...
. It is defined as knowingly engaging in a financial transaction with the proceeds of a crime for the purpose of concealing or disguising the illicit origin of the property from governments.


Role of financial institutions

While banks operating in the same country generally have to follow the same anti-money laundering laws and regulations, financial institutions all structure their anti-money laundering efforts slightly differently. Today, most financial institutions globally, and many non-financial institutions, are required to identify and report transactions of a suspicious nature to the financial intelligence unit in the respective country. For example, a bank must verify a customer's identity and, if necessary, monitor transactions for suspicious activity. This process comes under "
know your customer Know Your Customer (KYC) guidelines in financial services require that professionals make an effort to verify the identity, suitability, and risks involved with maintaining a business relationship. The procedures fit within the broader scope of a ...
" measures, which means knowing the identity of the customer and understanding the kinds of transactions in which the customer is likely to engage. By knowing one's customers, financial institutions can often identify unusual or suspicious behaviour, termed anomalies, which may be an indication of money laundering. Bank employees, such as tellers and customer account representatives, are trained in anti-money laundering and are instructed to report activities that they deem suspicious. Additionally,
anti-money laundering software Anti-money laundering software (AML software) is software used in the finance and legal industries to help companies comply with the legal requirements for financial institutions and other regulated entities to prevent or report money laundering ...
filters customer data, classifies it according to level of suspicion, and inspects it for anomalies. Such anomalies include any sudden and substantial increase in funds, a large withdrawal, or moving money to a bank secrecy jurisdiction. Smaller transactions that meet certain criteria may also be flagged as suspicious. For example, structuring can lead to flagged transactions. The software also flags names on government "blacklists" and transactions that involve countries hostile to the host nation. Once the software has mined data and flagged suspect transactions, it alerts bank management, who must then determine whether to file a report with the government.


Enforcement costs and associated privacy concerns

The financial services industry has become more vocal about the rising costs of anti-money laundering regulation and the limited benefits that they claim it brings. One commentator wrote that " thout facts, nti-money launderinglegislation has been driven on rhetoric, driving by ill-guided activism responding to the need to be "seen to be doing something" rather than by an objective understanding of its effects on
predicate crime In the criminal law of the United States, a predicate crime or offense is a crime which is a component of a larger crime. The larger crime may be racketeering, money laundering, financing of terrorism, etc. For example, to violate the Racketeer I ...
. The social panic approach is justified by the language used—we talk of the battle against terrorism or the war on drugs". ''
The Economist ''The Economist'' is a British weekly newspaper printed in demitab format and published digitally. It focuses on current affairs, international business, politics, technology, and culture. Based in London, the newspaper is owned by The Econo ...
'' magazine has become increasingly vocal in its criticism of such regulation, particularly with reference to countering terrorist financing, referring to it as a "costly failure", although it concedes that other efforts (like reducing identity and credit card fraud) may still be effective at combating money laundering. There is no precise measurement of the costs of regulation balanced against the harms associated with money laundering, and given the evaluation problems involved in assessing such an issue, it is unlikely that the effectiveness of terror finance and money laundering laws could be determined with any degree of accuracy. ''The Economist'' estimated the annual costs of anti-money laundering efforts in Europe and North America at US$5 billion in 2003, an increase from US$700 million in 2000. Government-linked economists have noted the significant negative effects of money laundering on economic development, including undermining domestic capital formation, depressing growth, and diverting capital away from development. Because of the intrinsic uncertainties of the amount of money laundered, changes in the amount of money laundered, and the cost of anti-money laundering systems, it is almost impossible to tell which anti-money laundering systems work and which are more or less cost effective. Besides economic costs to implement anti-money-laundering laws, improper attention to
data protection Information privacy is the relationship between the collection and dissemination of data, technology, the public expectation of privacy, contextual information norms, and the legal and political issues surrounding them. It is also known as data pr ...
practices may entail disproportionate costs to individual privacy rights. In June 2011, the data-protection advisory committee to the European Union issued a report on data protection issues related to the prevention of money laundering and terrorist financing, which identified numerous transgressions against the established legal framework on privacy and data protection. The report made recommendations on how to address money laundering and terrorist financing in ways that safeguard personal privacy rights and data protection laws. In the United States, groups such as the
American Civil Liberties Union The American Civil Liberties Union (ACLU) is a nonprofit organization founded in 1920 "to defend and preserve the individual rights and liberties guaranteed to every person in this country by the Constitution and laws of the United States". T ...
have expressed concern that money laundering rules require banks to report on their own customers, essentially conscripting private businesses "into agents of the surveillance state". Many countries are obligated by various international instruments and standards, such as the 1988
United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances The United Nations Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances of 1988 is one of three major drug control treaties currently in force. It provides additional legal mechanisms for enforcing the 1961 Single Con ...
, the 2000
Convention against Transnational Organized Crime The United Nations Convention Against Transnational Organized Crime (UNTOC, also called the Palermo Convention) is a 2000 United Nations-sponsored multilateral treaty against transnational organized crime. History The convention was adopted by a r ...
, the 2003 United Nations Convention against Corruption, and the recommendations of the 1989
Financial Action Task Force on Money Laundering The Financial Action Task Force (on Money Laundering) (FATF), also known by its French name, ''Groupe d'action financière'' (GAFI), is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat m ...
(FATF) to enact and enforce money laundering laws in an effort to stop narcotics trafficking, international organized crime, and corruption. Mexico, which has faced a significant increase in violent crime, established anti-money laundering controls in 2013 to curb the underlying crime issue.


Global organizations

Formed in 1989 by the G7 countries, the
Financial Action Task Force on Money Laundering The Financial Action Task Force (on Money Laundering) (FATF), also known by its French name, ''Groupe d'action financière'' (GAFI), is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat m ...
(FATF) is an intergovernmental body whose purpose is to develop and promote an international response to combat money laundering. The FATF Secretariat is housed at the headquarters of the
OECD The Organisation for Economic Co-operation and Development (OECD; french: Organisation de coopération et de développement économiques, ''OCDE'') is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate e ...
in Paris. In October 2001, FATF expanded its mission to include combating the financing of terrorism. FATF is a policy-making body that brings together legal, financial, and law enforcement experts to achieve national legislation and regulatory AML and CFT reforms. its membership consists of 36 countries and territories and two regional organizations. FATF works in collaboration with a number of international bodies and organizations. These entities have observer status with FATF, which does not entitle them to vote, but permits them full participation in plenary sessions and working groups. FATF has developed 40 recommendations on money laundering and 9 special recommendations regarding terrorist financing. FATF assesses each member country against these recommendations in published reports. Countries seen as not being sufficiently compliant with such recommendations are subjected to financial sanctions. FATF's three primary functions with regard to money laundering are: # Monitoring members’ progress in implementing anti-money laundering measures, # Reviewing and reporting on laundering trends, techniques, and countermeasures, and # Promoting the adoption and implementation of FATF anti-money laundering standards globally. The FATF currently comprises 34 member jurisdictions and 2 regional organisations, representing most major financial centres in all parts of the globe. The
United Nations Office on Drugs and Crime The United Nations Office on Drugs and Crime (UNODC; French: ''Office des Nations unies contre la drogue et le crime'') is a United Nations office that was established in 1997 as the Office for Drug Control and Crime Prevention by combining the ...
maintains the ''International Money Laundering Information Network'', a website that provides information and software for anti-money laundering data collection and analysis. The
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...
has a website that provides policy advice and best practices to governments and the private sector on anti-money laundering issues. The
Basel AML Index , french: link=no, Bâlois(e), it, Basilese , neighboring_municipalities= Allschwil (BL), Hégenheim (FR-68), Binningen (BL), Birsfelden (BL), Bottmingen (BL), Huningue (FR-68), Münchenstein (BL), Muttenz (BL), Reinach (BL), Riehen (BS ...
is an independent annual ranking that assesses the risk of money laundering and terrorist financing around the world.


Anti-money laundering measures by region

Many jurisdictions adopt a list of specific predicate crimes for money laundering prosecutions, while others criminalize the proceeds of any serious crimes.


Afghanistan

The Financial Transactions and Reports Analysis Center of Afghanistan (FinTRACA) was established as a Financial Intelligence Unit (FIU) under the Anti Money Laundering and Proceeds of Crime Law passed by decree late in 2004. The main purpose of this law is to protect the integrity of the Afghan financial system and to gain compliance with international treaties and conventions. The Financial Intelligence Unit is a semi-independent body that is administratively housed within the Central Bank of Afghanistan (Da Afghanistan Bank). The main objective of FinTRACA is to deny the use of the Afghan financial system to those who obtained funds as the result of illegal activity, and to those who would use it to support terrorist activities. To meet its objectives, the FinTRACA collects and analyzes information from a variety of sources. These sources include entities with legal obligations to submit reports to the FinTRACA when a suspicious activity is detected, as well as reports of cash transactions above a threshold amount specified by regulation. Also, FinTRACA has access to all related Afghan government information and databases. When the analysis of this information supports the supposition of illegal use of the financial system, the FinTRACA works closely with law enforcement to investigate and prosecute the illegal activity. FinTRACA also cooperates internationally in support of its own analyses and investigations and to support the analyses and investigations of foreign counterparts, to the extent allowed by law. Other functions include training of those entities with legal obligations to report information, development of laws and regulations to support national-level AML objectives, and international and regional cooperation in the development of AML typologies and countermeasures. Armenia To ensure the existence of legal mechanisms necessary for the stability of Armenian economy, the government set up
Financial Monitoring Center (FMC)
The Financial Monitoring Center of Armenia is a financial intelligence unit of an administrative type and is situated in the Central Bank of Armenia. The center proposed and adopted the Law of the Republic of Armenia on fight against Legalizing the Illegal Incomes and Financing of Terrorism. This Law is based on the FATF 40 Recommendations, model laws and best international practices. The law is intended to protect the rights, freedoms and legal interests of the citizens, society, and the state, as well as to ensure the existence of legal mechanisms necessary for the stability of economic system of the Republic of Armenia. The objectives of the Financial Monitoring Center are: * Implement specific measures to detect and deter money laundering and the financing of terrorist activities and to facilitate the investigation and prosecution of money laundering and terrorist financing offences including: Mandatory report requirement of suspicious financial transaction, large electronic fund transfers, and all large cash transactions, establishment of record keeping and client identification requirements for financial service providers and other persons that engage in businesses, professions or activities that are susceptible to being used for money laundering and the financing of terrorist activities. * Fulfill Armenia’s commitments to participate in the global fight against money laundering and terrorist financing. Towards this end, a special agency called Interagency Task Force 4 was created, which is responsible for the continual effective and cooperative activity in the sphere of fraudulence connected with money laundering, credit cards as well as terrorist financing in Armenia. * To respond to the threat posed by organized criminals and terrorists by providing law enforcement officials with the information they need to deprive criminals and terrorists of the proceeds of their criminal activities and funds to support terrorist activities, while ensuring that appropriate safeguards are put in place to protect privacy of persons with respect to personal information.


Australia

Australia has adopted a number of strategies to combat money laundering, which mirror those of a majority of western countries. The Australian Transaction Reports and Analysis Centre ( AUSTRAC) is Australia's financial intelligence unit to combat money laundering and terrorism financing, which requires every provider of designated services in Australia to report to it suspicious cash or other transactions and other specific information. The Attorney-General's Department maintains a list of outlawed terror organisations. It is an offense to materially support or be supported by such organisations. It is an offence to open a bank account in Australia in a false name, and rigorous procedures must be followed when new bank accounts are opened. The ''Anti-Money Laundering and Counter-Terrorism Financing Act 2006'' (Cth) (AML/CTF Act) is the principal legislative instrument, although there are also offence provisions contained in Division 400 of the ''
Criminal Code Act 1995 The criminal law of Australia is the body of law in Australia that relates to crime. Responsibility for criminal law in Australia is divided between the state and territory parliaments and the Commonwealth Parliament. This division is due to t ...
'' (Cth). Upon its introduction, it was intended that the AML/CTF Act would be further amended by a second tranche of reforms extending to designated non-financial businesses and professions (DNFBPs) including, inter alia, lawyers, accountants, jewellers and real estate agents; however, those further reforms have yet to be progressed. The ''
Proceeds of Crime Act 2002 The Proceeds of Crime Act 2002 (c.29) (POCA) is an Act of the Parliament of the United Kingdom which provides for the confiscation or civil recovery of the proceeds from crime and contains the principal money laundering legislation in the U ...
'' (Cth) imposes criminal penalties on a person who engages in money laundering.


Balkans

The organized criminal groups in
Albania Albania ( ; sq, Shqipëri or ), or , also or . officially the Republic of Albania ( sq, Republika e Shqipërisë), is a country in Southeastern Europe. It is located on the Adriatic and Ionian Seas within the Mediterranean Sea and shares ...
had long been involved in several illicit activities, including drug trade,
arms Arms or ARMS may refer to: *Arm or arms, the upper limbs of the body Arm, Arms, or ARMS may also refer to: People * Ida A. T. Arms (1856–1931), American missionary-educator, temperance leader Coat of arms or weapons *Armaments or weapons **Fi ...
and
human trafficking Human trafficking is the trade of humans for the purpose of forced labour, sexual slavery, or commercial sexual exploitation for the trafficker or others. This may encompass providing a spouse in the context of forced marriage, or the extrac ...
, kidnapping, murders and others. Such criminals were attracted to the
United Arab Emirates The United Arab Emirates (UAE; ar, اَلْإِمَارَات الْعَرَبِيَة الْمُتَحِدَة ), or simply the Emirates ( ar, الِْإمَارَات ), is a country in Western Asia (The Middle East). It is located at th ...
to seek refuge and to launder their illegal wealth. The UAE lacked regulations to combat the issue of terror funding and money laundering. Consequently, it became a safe haven for criminals from Albania and other Balkan countries, who escaped justice and continued to carry out their illegal activities while living in the Emirates. For countries like Albania, the complications were greater, due to the lack of bilateral extradition treaty with the UAE. Authorities in Albania struggled and failed to get most of the criminals extradited from the Emirates. Usually, the Gulf nation doesn’t refuse to extradite these criminals, but it used to extend the process to the point of their release.


Bangladesh

The first anti-money laundering legislation in Bangladesh was the ''Money Laundering Prevention Act, 2002''. It was replaced by the ''Money Laundering Prevention Ordinance 2008''. Subsequently, the ordinance was repealed by the ''Money Laundering Prevention Act, 2009''. In 2012, government again replaced it with the ''Money Laundering Prevention Act, 2012'' In terms of section 2, "Money Laundering means – (i) knowingly moving, converting, or transferring proceeds of crime or property involved in an offence for the following purposes:- (1) concealing or disguising the illicit nature, source, location, ownership or control of the proceeds of crime; or (2) assisting any person involved in the commission of the predicate offence to evade the legal consequences of such offence; (ii) smuggling money or property earned through legal or illegal means to a foreign country; (iii) knowingly transferring or remitting the proceeds of crime to a foreign country or remitting or bringing them into Bangladesh from a foreign country with the intention of hiding or disguising its illegal source; or (iv) concluding or attempting to conclude financial transactions in such a manner so as to reporting requirement under this Act may be avoided;(v) converting or moving or transferring property with the intention to instigate or assist for committing a predicate offence; (vi) acquiring, possessing or using any property, knowing that such property is the proceeds of a predicate offence; (vii) performing such activities so as to the illegal source of the proceeds of crime may be concealed or disguised; (viii) participating in, associating with, conspiring, attempting, abetting, instigate or counsel to commit any offences mentioned above." To prevent these Illegal uses of money, the Bangladesh government has introduced the Money Laundering Prevention Act. The Act was last amended in the year 2009 and all the financial institutes are following this act. Till today there are 26 circulars issued by Bangladesh Bank under this act. To prevent money laundering, a banker must do the following: * While opening a new account, the account opening form should be duly filled up by all the information of the customer. * The KYC must be properly filled. * The Transaction Profile (TP) is mandatory for a client to understand his/her transactions. If needed, the TP must be updated at the client's consent. * All other necessary papers should be properly collected along with the National ID card. * If any suspicious transaction is noticed, the Branch Anti Money Laundering Compliance Officer (BAMLCO) must be notified and accordingly the Suspicious Transaction Report (STR) must be filled out. * The cash department should be aware of the transactions. It must be noted if suddenly a big amount of money is deposited in any account. Proper documents are required if any client does this type of transaction. * Structuring, over/ under invoicing is another way to do money laundering. The foreign exchange department should look into this matter cautiously. * If any account has a transaction over 1 million taka in a single day, it must be reported in a cash transaction report (CTR). * All bank officials must go through all the 26 circulars and use them.


Canada

In 1991, the Proceeds of Crime (Money Laundering) Act was brought into force in Canada to give legal effect to the former
FATF The Financial Action Task Force (on Money Laundering) (FATF), also known by its French name, ''Groupe d'action financière'' (GAFI), is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat m ...
Forty Recommendations by establishing record keeping and client identification requirements in the financial sector to facilitate the investigation and prosecution of money laundering offences under the
Criminal Code A criminal code (or penal code) is a document that compiles all, or a significant amount of a particular jurisdiction's criminal law. Typically a criminal code will contain offences that are recognised in the jurisdiction, penalties that migh ...
and the
Controlled Drugs and Substances Act The ''Controlled Drugs and Substances Act'' (french: Loi réglementant certaines drogues et autres substances) (the ''Act'') is Canada's federal drug control statute. Passed in 1996 under Prime Minister Jean Chrétien's government, it repeals ...
. In 2000, the Proceeds of Crime (Money Laundering) Act was amended to expand the scope of its application and to establish a financial intelligence unit with national control over money laundering, namely
FINTRAC The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC; french: Centre d'analyse des opérations et déclarations financières du Canada) is the national financial intelligence agency of Canada. FINTRAC was established in 2000 u ...
. In December 2001, the scope of the Proceeds of Crime (Money Laundering) Act was again expanded by amendments enacted under the Anti-Terrorism Act with the objective of deterring terrorist activity by cutting off sources and channels of funding used by terrorists in response to
9/11 The September 11 attacks, commonly known as 9/11, were four coordinated suicide terrorist attacks carried out by al-Qaeda against the United States on Tuesday, September 11, 2001. That morning, nineteen terrorists hijacked four commercial ...
. The Proceeds of Crime (Money Laundering) Act was renamed the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. In December 2006, the Proceeds of Crime (Money Laundering) and Terrorist Financing Act was further amended, in part, in response to pressure from the FATF for Canada to tighten its money laundering and financing of terrorism legislation. The amendments expanded the client identification, record-keeping and reporting requirements for certain organizations and included new obligations to report attempted suspicious transactions and outgoing and incoming international electronic fund transfers, undertake risk assessments and implement written compliance procedures in respect of those risks. The amendments also enabled greater money laundering and terrorist financing intelligence-sharing among enforcement agencies. In Canada, casinos, money service businesses, notaries, accountants, banks, securities brokers, life insurance agencies, real estate salespeople and dealers in precious metals and stones are subject to the reporting and record keeping obligations under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. However, in recent years, casinos and realtors have been embroiled in scandal for aiding and abetting money launderers, especially in Vancouver, which has come to be known as the " Vancouver Model". Some have speculated that approximately $1 Billion is laundered in Vancouver per year.


European Union

The fourth iteration of the EU's anti-money laundering directive (AMLD IV) was published on 5 June 2015, after clearing its last legislative stop at the European Parliament. Updated as required; links to many relevant documents. This directive brought the EU's money laundering laws more in line with the US's, which is advantageous for financial institutions operating in both jurisdictions. The Fifth Money Laundering Directive (5MLD) comes into force on 10 January 2020, addressing a number of weaknesses in the European Union's AML/CFT regime that came to light after the enactment of the Fourth Money Laundering Directive AMLD IV). The AMLD5 increased the scope of the EU's AML regulations. It decreased the threshold of customer identity verification for the prepaid card industry from EUR 250 to EUR 150. The customers who deposit or transfer funds more than EUR150 will be identified by the prepaid card issuing company. Lack of harmonization in AML requirements between the US and EU has complicated the compliance efforts of global institutions that are looking to standardize the Know Your Customer (KYC) component of their AML programs across key jurisdictions. AMLD IV promises to better align the AML regimes by adopting a more risk-based approach compared to its predecessor, AMLD III. Certain components of the directive, however, go beyond current requirements in both the EU and US, imposing new implementation challenges on banks. For instance, more public officials are brought within the scope of the directive, and EU member states are required to establish new registries of "beneficial owners" (i.e., those who ultimately own or control each company) which will impact banks. AMLD IV became effective 25 June 2015. On 24 January 2019, the
European Commission The European Commission (EC) is the executive of the European Union (EU). It operates as a cabinet government, with 27 members of the Commission (informally known as "Commissioners") headed by a President. It includes an administrative body o ...
sent official warnings to ten member states as part of a crackdown on lax application of money laundering regulations. The Commission sent Germany a letter of formal notice, the first step of the EU legal procedure against states. Belgium, Finland, France, Lithuania, and Portugal were sent reasoned opinions, the second step of the procedure which could lead to fines. A second round of reasoned opinions was sent to Bulgaria, Cyprus, Poland, and Slovakia. The ten countries have two months to respond or face court action. The commission had set a 26 June 2017 deadline for EU countries to apply new rules against money laundering and terrorist financing. On 13 February 2019, the Commission added Saudi Arabia, Panama, Nigeria and other jurisdictions to a blacklist of nations that pose a threat because of lax controls on terrorism financing and money laundering. This is a more expansive list than that of FATF. In addition, the European Commission has created a list of high-risk countries on money laundering and terrorism financing, including: Afghanistan, Iran, Iraq, North Korea, Syria, Uganda, Vanuatu and Yemen (since 20 September 2016), Trinidad and Tobago (since 14 February 2018), Pakistan (since 2 October 2018), The Bahamas, Barbados, Botswana, Cambodia, Ghana, Jamaica, Mauritius, Mongolia, Myanmar, Nicaragua, Panama and Zimbabwe (since 1 October 2020).


India

In 2002, the
Parliament of India The Parliament of India (International Alphabet of Sanskrit Transliteration, IAST: ) is the supreme legislative body of the Republic of India. It is a bicameralism, bicameral legislature composed of the president of India and two houses: the R ...
passed an act called the
Prevention of Money Laundering Act, 2002 Prevention of Money Laundering Act, 2002 is an Act of the Parliament of India enacted by the NDA government to prevent money-laundering and to provide for confiscation of property derived from money-laundering. PMLA and the Rules notified th ...
. The main objectives of this act are to prevent money-laundering as well as to provide for confiscation of property either derived from or involved in, money-laundering. Section 12 (1) describes the obligations that banks, other financial institutions, and intermediaries have to :(a) Maintain records that detail the nature and value of transactions, whether such transactions comprise a single transaction or a series of connected transactions, and where these transactions take place within a month. :(b) Furnish information on transactions referred to in clause (a) to the Director within the time prescribed, including records of the identity of all its clients. Section 12 (2) prescribes that the records referred to in sub-section (1) as mentioned above, must be maintained for ten years after the transactions finished. It is handled by the Indian Income Tax Department. The provisions of the Act are frequently reviewed and various amendments have been passed from time to time. Most money laundering activities in India are through political parties, corporate companies and the share market. These are investigated by the
Enforcement Directorate The Directorate of Enforcement (ED) is a law enforcement agency and economic intelligence agency responsible for enforcing economic laws and fighting economic crime in India. It is part of the Department of Revenue, Ministry of Finance, Gover ...
and Indian Income Tax Department. According to
Government of India The Government of India (ISO: ; often abbreviated as GoI), known as the Union Government or Central Government but often simply as the Centre, is the national government of the Republic of India, a federal democracy located in South Asia, c ...
, out of the total tax arrears of about pertain to money laundering and securities scam cases. Bank accountants must record all transactions over Rs. 1 million and maintain such records for 10 years. Banks must also make cash transaction reports (CTRs) and suspicious transaction reports over Rs. 1 million within 7 days of initial suspicion. They must submit their reports to the Enforcement Directorate and Income Tax Department.


Nigeria

To combat money laundering, the Economic and Financial Crimes Commission was established in 2003. This body works alongside the
Central Bank of Nigeria The Central Bank of Nigeria (CBN) is the central bank and apex monetary authority of Nigeria established by the CBN Act of 1958 and commenced operations on 1 July 1959. The major regulatory objectives of the bank as stated in the CBN Act are ...
and the National Drug Law Enforcement Agency, to investigate and prosecute, individuals charged with the crime. The Money laundering Act was also established in 2011. This act contains elaborate provisions on the legal and institutional framework to prevent money laundering. The act also established the Special Control Unit against Money Laundering, under the EFCC. This act made key changes to the repealed act, some of which are; * Restrictions on cash payment transactions: Transactions exceeding N5 million for individuals and N10 million for corporate bodies are to be made through a banking system, and any attempt at breaking up these transactions must be reported. * Enhanced KYC requirements for agents and politically exposed persons; The act also states that all agents acting on behalf of customers must be fully identified and verified. It also established that the source of wealth of political persons must be investigated and identified. * Preservation and reconstruction of transaction records: The MLA states that all transaction records must be stored for a minimum of five years, and should be preserved in a way that they can be readily accessible when in need. * Pre-launch assessment of new technologies or products: From henceforth all new technologies must be assessed for money laundering and terrorism risks, and appropriate measures must be taken to manage and mitigate the risks. * Establishment of the Special Control Unit against Money Laundering: The act established and statutorily backed this body to monitor and oversee the operations of non-financial institutions. And this body works under the EFCC. * Financial transaction and reporting: All transactions exceeding N5 million for individuals and N10 million for corporate bodies, must be reported by all financial institutions to the Nigerian Financial Intelligence Unit. Other measures have been taken by the government to prevent money laundering. In May 2022, President Muhammadu Buhari signed into law three bills. These bills are; Money laundering (Prevention and Prohibition bill), 2022, the Terrorism (Prevention and Prohibition bill) 2022, and the Proceeds of Crime (Recovery and Management) Bill, 2022. The Central Bank of Nigeria also listed Regulations to prevent Money laundering in Nigeria. The Apex bank stated that all transactions conducted through correspondent banking relationships shall be managed with a risk-based approach and Know Your Correspondent procedures, this is to ascertain whether the bank or financial institution is regulated by a money laundering prevention body. The correspondent is to take action to identify the customer. The CBN also released a guidance note named; Anti-money Laundering/combating the financing of terrorism (AML/CFT) for OFIs. The CBN Financial Policy and Regulation Director Chibuzo Efobi mentioned that the guidance note would enable the sub-sector to identify, assess and minimize the risks of terrorist financing and money laundering. He also said that this Guidance note would identify risk management procedures that would lessen the vulnerability of financial institutions to Money laundering schemes.


Latin America

In Latin America, money laundering is mainly linked to drug trafficking activities and to having connections with criminal activity, such as crimes that have to do with arms trafficking, human trafficking, extortion, blackmail, smuggling, and acts of corruption of people linked to governments, such as bribery, which are more common in Latin American countries. There is a relationship between corruption and money laundering in developing countries. The economic power of Latin America increases rapidly and without support, these fortunes being of illicit origin having the appearance of legally acquired profits. With regard to money laundering, the ultimate goal of the process is to integrate illicit capital into the general economy and transform it into licit goods and services. The money laundering practice uses various channels to legalize everything achieved through illegal practices. As such, it has different techniques depending on the country where this illegal operation is going to be carried out: * In Colombia, the laundering of billions of dollars, which come from drug trafficking, is carried out through imports of contraband from the parallel exchange market. * In Central American countries such as Guatemala and Honduras, money laundering continues to increase in the absence of adequate legislation and regulations in these countries. Money laundering activities in Costa Rica have experienced substantial growth, especially using large-scale currency smuggling and investments of drug cartels in real estate, within the tourism sector. Furthermore, the Colon Free Zone in Panama, continues to be the area of operations for money laundering where cash is exchanged for products of different nature that are then put up for sale at prices below those of production for a return fast of the capital. * In Mexico, the preferred techniques continue to be the smuggling of currency abroad, in addition to electronic transfers, bank drafts with Mexican banks and operations in the parallel exchange market. * Money Laundering in the Caribbean countries continues to be a serious problem that seems to be very dangerous. Specifically, in Antigua, the Dominican Republic, Jamaica, Saint Vincent and the Grenadines. Citizens of the Dominican Republic who have been involved in money laundering in the United States, use companies that are dedicated to transferring funds sent to the Dominican Republic in amounts of less than $10,000 under the use of false names. Moreover, in Jamaica, multimillion-dollar asset laundering cases were discovered through telephone betting operations abroad. Thousands of suspicious transactions have been detected in French overseas territories. Free trade zones such as Aruba, meanwhile, remain the preferred areas for money laundering. The offshore banking centers, the secret bank accounts and the tourist complexes are the channels through which the launderers whiten the proceeds of the illicit money. Casinos continue to attract organizations that deal with money laundering. Aruba and the Netherlands Antilles, the Cayman Islands, Colombia, Mexico, Panama and Venezuela are considered high priority countries in the region, due to the strategies used by the washers.


Economic impact in the region

The practice of money laundering, among other economic and financial crimes seeps into the economic and political structures of most developing countries therefore resulting to political instability and economic digression. Money laundering is still a great concern for the financial services industry. About 50% of the money laundering incidents in Latin America were reported by organizations in the financial sector. According to PwC's 2014 global economic crime survey, in Latin America only 2.8% of respondents in Latin America claimed suffering Antitrust/Competition Law incidents, compared to 5.2% of respondents globally. It has been shown that money laundering has an impact on the financial behavior and macroeconomic performance of the industrialized countries. In these countries the macroeconomic consequences of money laundering are transmitted through several channels. Thus, money laundering complicates the formulation of economic policies. It is assumed that the proceeds of criminal activities are laundered by means of the notes and coins in circulation of the monetary substitutes. The laundering causes disproportionate changes in the relative prices of assets which implies that resources are allocated inefficiently; and, therefore may have negative implications for economic growth, apparently money laundering is associated with a lower economic growth. The
Office of National Drug Control Policy The Office of National Drug Control Policy (ONDCP) is a component of the Executive Office of the President of the United States. The Director of the ONDCP, colloquially known as the Drug Czar, heads the office. "Drug Czar" was a term first used ...
of the United States estimates that only in that country, sales of narcotic drugs represent about 57,000 million dollars annually and most of these transactions are made in cash.


Jurisprudence

Money laundering has been increasing. A key factor behind the growing money laundering is the ineffective local enforcement of money laundering laws. Perhaps because of the lack of importance that has been given to the subject, since the 21st century started, there was no jurisprudence regarding the laundering of money, assets, the conversion or transfer of goods. What is even worse, the laws of the Latin American countries have not dealt with their study profoundly. It is an issue that concerns the whole world and is the subject of seminars, conferences, and academic analysis in different regions of the planet. Now a new figure called the Economic Criminal Law is being implemented, which should be implemented in modern societies, which has been inflicted enormous damage to the point of affecting the general economy of the states. Even though developing countries have responded and continue to respond, through legislative measures, to the problem of money laundering, at the national level, however, money launderers have taken advantage of the lax regulatory environment, vulnerable financial systems along with the continued civil and political unrest of most developing countries.


Singapore

Singapore Singapore (), officially the Republic of Singapore, is a sovereign island country and city-state in maritime Southeast Asia. It lies about one degree of latitude () north of the equator, off the southern tip of the Malay Peninsula, borde ...
’s legal framework for combating money laundering is contained in a patchwork of legal instruments, the main elements of which are: * The Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act (CDSA). This statute criminalises money laundering and imposes the requirement for persons to file suspicious transaction reports (STRs) and make a disclosure whenever physical currency or goods exceeding S$20,000 are carried into or out of Singapore. * The Mutual Assistance in Criminal Matters Act (MACMA). This statute sets out the framework for mutual legal assistance in criminal matters. * Legal instruments issued by regulatory agencies (such as the
Monetary Authority of Singapore The Monetary Authority of Singapore (MAS) is the central bank and financial regulatory authority of Singapore. It administers the various statutes pertaining to money, banking, insurance, securities and the financial sector in general, as well ...
(MAS), in relation to financial institutions (FIs)) imposing requirements to conduct customer due diligence (CDD). The term ‘money laundering’ is not used as such within the CDSA. Part VI of the CDSA criminalises the laundering of proceeds generated by criminal conduct and drug tracking via the following offences: * The assistance of another person in retaining, controlling or using the benefits of
drug dealing The illegal drug trade or drug trafficking is a global black market dedicated to the cultivation, manufacture, distribution and sale of prohibited drugs. Most jurisdictions prohibit trade, except under license, of many types of drugs throug ...
or criminal conduct under an arrangement (whether by concealment, removal from jurisdiction, transfer to nominees or otherwise) ection 43(1)/44(1) * The concealment, conversion, transfer or removal from the jurisdiction, or the acquisition, possession or use of benefits of drug dealing or criminal conduct ection 46(1)/47(1) * The concealment, conversion, transfer or removal from the jurisdiction of another person's benefits of drug dealing or criminal conduct ection 46(2)/47(2) * The acquirement, possession or use of another person's benefits of drug dealing or criminal conduct ection 46(3)/47(3)


South Africa

In South Africa, the Financial Intelligence Centre Act (2001) and subsequent amendments have added responsibilities to the Financial Intelligence Centre (FIC) to combat money laundering.


Thailand


United Arab Emirates

The United Arab Emirates has long been known as a hub of illicit financial flows and corruption. A large number business, real estate and financial transactions of the country majorly involve some sort of illegal activity. Moreover, several corrupt and criminal actors from across the world operate through or from the Emirates, including European money launderers, Nigerian kleptocrats, East African gold smugglers, Afghan warlords and others. Even the royal family members of the UAE are often known to be associated with certain cases of offshore holdings. However, in 2022, the UAE fell into a risk of being named in the
Financial Action Task Force The Financial Action Task Force (on Money Laundering) (FATF), also known by its French name, ''Groupe d'action financière'' (GAFI), is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat m ...
(FATF) “grey list”. The list defines nations determined to have “strategic deficiencies” in combating money laundering and terrorist financing. On 4 March 2022, FATF placed the UAE in its ‘grey’ list of countries that are subject to increased monitoring. In April 2020, the Emirates had been warned of its money laundering activities, where FATF called the UAE’s limited prosecutions on the issue a “concern”. In November 2021, the group received a report from the Emirates, which didn't reach much of the thresholds required for avoid the grey list. The Irish Department of Housing urged minister Darragh O’Brien to “ask in the strongest terms for the UAE to account for its relationship to
Daniel Kinahan Daniel Joseph Kinahan (born 25 June 1977) is an Irish boxing promoter and suspected crime boss. He has been named by the High Court of Ireland as a senior figure in organised crime on a global scale. The Criminal Assets Bureau has stated he "c ...
” a drug kingpin charged along with his brother, Christopher Kinahan in 2018 by the High Court of controlling and managing the daily drug operations in Ireland. The Kinahan brothers are sons of the Kinahan Cartel founder, Christy Kinahan Senior, who smuggled drugs and firearms into the UK, Ireland, and mainland Europe for long. For several years, the Kinahan leadership had been residing in Dubai, where Daniel denied his involvement in organized crime by defending himself as a ‘high-profile businessman in the professional boxing industry’. According to Panorama investigation, Daniel has operated in the boxing industry through MTK and simultaneously operated Europe’s biggest money laundering,
drug trafficking A drug is any chemical substance that causes a change in an organism's physiology or psychology when consumed. Drugs are typically distinguished from food and substances that provide nutritional support. Consumption of drugs can be via insuffla ...
, and gangland executions networks from Dubai. A spokesperson for minister O’Brien said, “respect for human rights is a cornerstone of Ireland’s foreign policy,” when asked if the minister would raise the concerns regarding Daniel’s presence and operations in Dubai on his visit in March 2022 for
St Patrick’s Day Saint Patrick's Day, or the Feast of Saint Patrick ( ga, Lá Fhéile Pádraig, lit=the Day of the Festival of Patrick), is a cultural and religious celebration held on 17 March, the traditional death date of Saint Patrick (), the foremost pat ...
.


United Kingdom

Money laundering and terrorist funding legislation in the UK is governed by six Acts of primary legislation:- *
Terrorism Act 2000 The Terrorism Act 2000 (c.11) is the first of a number of general Terrorism Acts passed by the Parliament of the United Kingdom. It superseded and repealed the Prevention of Terrorism (Temporary Provisions) Act 1989 and the Northern Ireland (Emer ...
* Anti-terrorism, Crime and Security Act 2001 *
Proceeds of Crime Act 2002 The Proceeds of Crime Act 2002 (c.29) (POCA) is an Act of the Parliament of the United Kingdom which provides for the confiscation or civil recovery of the proceeds from crime and contains the principal money laundering legislation in the U ...
*
Serious Organised Crime and Police Act 2005 The Serious Organized Crime and Police Act 2005 (c.15) (often abbreviated to SOCPA or SOCAP) is an Act of the Parliament of the United Kingdom aimed primarily at creating the Serious Organised Crime Agency. It also significantly extended and si ...
*
Criminal Finances Act 2017 The Criminal Finances Act 2017 (c. 22) is an Act of the Parliament of the United Kingdom that amends the Proceeds of Crime Act 2002 to expand the provisions for confiscating funds to deal with terrorist property and proceeds of tax evasion. The ...
*
Sanctions and Anti-Money Laundering Act 2018 The Sanctions and Anti-Money Laundering Act 2018 (SAMLA 2018) is an Act of Parliament of the United Kingdom applying to the United Kingdom. The Act has two purposes; a) To enable the UK to create its own sanctions framework, allowing it to issue ...
Money Laundering Regulations are designed to protect the UK financial system, as well as preventing and detecting crime. If a business is covered by these regulations then controls are put in place to prevent it being used for money laundering. The
Proceeds of Crime Act 2002 The Proceeds of Crime Act 2002 (c.29) (POCA) is an Act of the Parliament of the United Kingdom which provides for the confiscation or civil recovery of the proceeds from crime and contains the principal money laundering legislation in the U ...
contains the primary UK anti-money laundering legislation, including provisions requiring businesses within the "regulated sector" (banking, investment, money transmission, certain professions, etc.) to report to the authorities suspicions of money laundering by customers or others. Money laundering is broadly defined in the UK.Section 340, Proceeds of Crime Act 2002 In effect any handling or involvement with any proceeds of any crime (or monies or assets representing the proceeds of crime) can be a money laundering offence. An offender's possession of the proceeds of his own crime falls within the UK definition of money laundering.Section 329, Proceeds of Crime Act 2002 The definition also covers activities within the traditional definition of money laundering, as a process that conceals or disguises the proceeds of crime to make them appear legitimate. Unlike certain other jurisdictions (notably the US and much of Europe), UK money laundering offences are not limited to the proceeds of serious crimes, nor are there any monetary limits. Financial transactions need no money laundering design or purpose for UK laws to consider them a money laundering offence. A money laundering offence under UK legislation need not even involve money, since the money laundering legislation covers assets of any description. In consequence, any person who commits an acquisitive crime (i.e., one that produces some benefit in the form of money or an asset of any description) in the UK inevitably also commits a money laundering offence under UK legislation. This applies also to a person who, by criminal conduct, evades a liability (such as a taxation liability)—which lawyers call "obtaining a pecuniary advantage"—as he is deemed thereby to obtain a sum of money equal in value to the liability evaded. The principal money laundering offences carry a maximum penalty of 14 years' imprisonment.Section 334, Proceeds of Crime Act 2002 Secondary regulation is provided by the Money Laundering Regulations 2003, which were replaced by the Money Laundering Regulations 2007. They are directly based on the EU Directives 91/308/EEC, 2001/97/EC and (through the 2007 regulations) 2005/60/EC. The regulations list a number of supervisory authorities who have a role in overseeing the financial activities of their members. One consequence of the Act is that solicitors, accountants, tax advisers, and insolvency practitioners who suspect (as a consequence of information received in the course of their work) that their clients (or others) have engaged in tax evasion or other criminal conduct that produced a benefit, now must report their suspicions to the authorities (since these entail suspicions of money laundering). In most circumstances it would be an offence, "tipping-off", for the reporter to inform the subject of his report that a report has been made. These provisions do not however require disclosure to the authorities of information received by certain professionals in privileged circumstances or where the information is subject to
legal professional privilege In common law jurisdictions, legal professional privilege protects all communications between a professional legal adviser (a solicitor, barrister or attorney) and his or her clients from being disclosed without the permission of the client. Th ...
. Others that are subject to these regulations include financial institutions, credit institutions, estate agents (which includes chartered surveyors), trust and company service providers, high value dealers (who accept cash equivalent to €15,000 or more for goods sold), and casinos. Professional guidance (which is submitted to and approved by the UK Treasury) is provided by industry groups including the Joint Money Laundering Steering Group, the Law Society. and the Consultative Committee of Accountancy Bodies (CCAB). However, there is no obligation on banking institutions to routinely report monetary deposits or transfers above a specified value. Instead reports must be made of all suspicious deposits or transfers, irrespective of their value. The reporting obligations include reporting suspicious gains from conduct in other countries that would be criminal if it took place in the UK. Exceptions were later added for certain activities legal where they took place, such as
bullfighting Bullfighting is a physical contest that involves a bullfighter attempting to subdue, immobilize, or kill a bull, usually according to a set of rules, guidelines, or cultural expectations. There are several variations, including some forms wh ...
in Spain. More than 200,000 reports of suspected money laundering are submitted annually to authorities in the UK (there were 240,582 reports in the year ended 30 September 2010. This was an increase from the 228,834 reports submitted in the previous year).The Suspicious Activity Reports Regime Annual Report 2010 published by SOCA Most of these reports are submitted by banks and similar financial institutions (there were 186,897 reports from the banking sector in the year ended 30 September 2010). Although 5,108 different organisations submitted suspicious activity reports to the authorities in the year ended 30 September 2010, just four organisations submitted approximately half of all reports, and the top 20 reporting organisations accounted for three-quarters of all reports. The offence of failing to report a suspicion of money laundering by another person carries a maximum penalty of five years' imprisonment. The Criminal Finances Act 2017 introduced
unexplained wealth order An unexplained wealth order (UWO) is a type of court order issued by a Judiciaries of the United Kingdom, British court to compel the target to reveal the sources of their Black money, unexplained wealth. UWOs were introduced by sections 1–2 of ...
s, another tool to combat money laundering, whereby the owner of an asset greater than £50,000 may be required to show how the purchase was financed. On 1 May 2018, the UK House of Commons, without opposition, passed the Sanctions and Anti-Money Laundering Bill, which will set out the UK government's intended approach to exceptions and licenses when the nation becomes responsible for implementing its own sanctions and will also require notorious overseas British territory tax havens such as the Cayman Islands and the British Virgin Islands to establish public registers of the beneficial ownership of firms in their jurisdictions by the end of 2020. The legislation was passed by the House of Lords on 21 May and received Royal Asset on 23 May. However, the Act's public register provision is facing legal challenges from local governments in the Cayman Islands and British Virgin Islands, who argue that it violates their Constitutional sovereignty. Under the Proceeds of Crime Act goods that criminals cannot legally account for are seized and sold at auction to raise funds. This is usually carried out by authorised auction houses and often within the geographical areas of the criminals.


''Bureaux de change''

All UK ''
Bureaux de change A bureau de change (plural bureaux de change, both ) (British English) or currency exchange (American English) is a business where people can exchange one currency for another. Nomenclature Although originally French, the term "bureau de chan ...
'' are registered with
His Majesty's Revenue and Customs , patch = , patchcaption = , logo = HM Revenue & Customs.svg , logocaption = , badge = , badgecaption = , flag = , flagcaption = , image_size = , co ...
, which issues a trading licence for each location. Bureaux de change and
money transmitter In the legal code of the United States, a money transmitter or money transfer service is a business entity that provides money transfer services or payment instruments. Money transmitters in the US are part of a larger group of entities called mo ...
s, such as
Western Union The Western Union Company is an American multinational financial services company, headquartered in Denver, Colorado. Founded in 1851 as the New York and Mississippi Valley Printing Telegraph Company in Rochester, New York, the company chang ...
outlets, in the UK fall within the "regulated sector" and are required to comply with the Money Laundering Regulations 2007. Checks can be carried out by HMRC on all
Money Service Business A money services business (MSB) is a legal term used by financial regulators to describe businesses that transmit or convert money. The definition was created to encompass more than just banks which normally provide these services to include non-ba ...
es.


London Bullion Market Association

In November 2020, the
London Bullion Market Association The London Bullion Market Association (now known simply as LBMA), established in 1987, is the international trade association representing the global Over The Counter (OTC) bullion market, and defines itself as "the global authority on precious ...
wrote a letter to a number of countries with huge
gold Gold is a chemical element with the symbol Au (from la, aurum) and atomic number 79. This makes it one of the higher atomic number elements that occur naturally. It is a bright, slightly orange-yellow, dense, soft, malleable, and ductile met ...
markets, including
Dubai Dubai (, ; ar, دبي, translit=Dubayy, , ) is the most populous city in the United Arab Emirates (UAE) and the capital of the Emirate of Dubai, the most populated of the 7 emirates of the United Arab Emirates.The Government and Politics of ...
(United Arab Emirates), China, Singapore, South Africa, Russia, Japan, United States and others, laying out the standards regarding money laundering and other issues like where they sourced their gold. It also threatened that these countries could be blacklisted, if they failed to meet the regulatory standards. This was
LBMA The London Bullion Market Association (now known simply as LBMA), established in 1987, is the international trade association representing the global Over The Counter (OTC) bullion market, and defines itself as "the global authority on precious ...
’s first move to challenge the illegal or unethical production and trading of gold.


Ernst & Young Global Limited

A former partner of the UK-based accounting firm
Ernst & Young Ernst & Young Global Limited, trade name EY, is a multinational professional services partnership headquartered in London, England. EY is one of the largest professional services networks in the world. Along with Deloitte, KPMG and Pricewaterh ...
, Amjad Rihan was ousted after he attempted to report the money laundering and gold smuggling efforts of
Dubai Dubai (, ; ar, دبي, translit=Dubayy, , ) is the most populous city in the United Arab Emirates (UAE) and the capital of the Emirate of Dubai, the most populated of the 7 emirates of the United Arab Emirates.The Government and Politics of ...
-based firm Kaloti Jewellery International. Rihan had claimed that “Kaloti was knowingly dealing in gold bullion smuggled out of Morocco”. However, after he reported the issue, the Dubai government body, DMCC, attempted to put unnecessary pressure on him and his firm. In 2021, Ernst & Young withdrew an eight-year-long legal fight against Rihan asking a compensation of $10.8 million from him.


United States

The approach in the United States to stopping money laundering is usually broken into two areas: preventive (regulatory) measures and criminal measures.


Preventive

In an attempt to prevent dirty money from entering the U.S. financial system in the first place, the United States Congress passed a series of laws, starting in 1970, collectively known as the
Bank Secrecy Act The Bank Secrecy Act of 1970 (BSA), also known as the Currency and Foreign Transactions Reporting Act, is a U.S. law requiring financial institutions in the United States to assist U.S. government agencies in detecting and preventing money laund ...
(BSA). These laws, contained in sections 5311 through 5332 of Title 31 of the United States Code, require
financial institution Financial institutions, sometimes called banking institutions, are business entities that provide services as intermediaries for different types of financial monetary transactions. Broadly speaking, there are three major types of financial insti ...
s, which under the current definition include a broad array of entities, including banks, credit card companies, life insurers, money service businesses and broker-dealers in securities, to report certain transactions to the
United States Department of the Treasury The Department of the Treasury (USDT) is the national treasury and finance department of the federal government of the United States, where it serves as an executive department. The department oversees the Bureau of Engraving and Printing and t ...
. Cash transactions in excess of a certain amount must be reported on a
currency transaction report A currency transaction report (CTR) is a report that U.S. financial institutions are required to file with FinCEN for each deposit, withdrawal, exchange of currency, or other payment or transfer, by, through, or to the financial institution which i ...
(CTR), identifying the individual making the transaction as well as the source of the cash. The law originally required all transactions of
US$ The United States dollar (symbol: $; code: USD; also abbreviated US$ or U.S. Dollar, to distinguish it from other dollar-denominated currencies; referred to as the dollar, U.S. dollar, American dollar, or colloquially buck) is the official ...
5,000 or more to be reported, but due to excessively high levels of reporting the threshold was raised to US$10,000. The U.S. is one of the few countries in the world to require reporting of all cash transactions over a certain limit, although certain businesses can be exempt from the requirement. Additionally, financial institutions must report transaction on a
Suspicious Activity Report In financial regulation, a Suspicious Activity Report (SAR) or Suspicious Transaction Report (STR) is a report made by a financial institution about suspicious or potentially suspicious activity. The criteria to decide when a report must be ma ...
(SAR) that they deem "suspicious", defined as a knowing or suspecting that the funds come from illegal activity or disguise funds from illegal activity, that it is structured to evade BSA requirements or appears to serve no known business or apparent lawful purpose; or that the institution is being used to facilitate criminal activity. Attempts by customers to circumvent the BSA, generally by structuring cash deposits to amounts lower than US$10,000 by breaking them up and depositing them on different days or at different locations also violates the law. The financial database created by these reports is administered by the U.S.'s Financial Intelligence Unit (FIU), called the
Financial Crimes Enforcement Network The Financial Crimes Enforcement Network (FinCEN) is a bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions in order to combat domestic and international money laundering, terr ...
(FinCEN), located in Vienna, Virginia. The reports are made available to U.S. criminal investigators, as well as other FIU's around the globe, and FinCEN conducts computer assisted analyses of these reports to determine trends and refer investigations. The BSA requires financial institutions to engage in customer due diligence, or KYC, which is sometimes known in parlance as know your customer. It includes obtaining satisfactory identification to assure that the account is in the customer's actual name and understanding the expected nature and source of the money that flows through the customer's accounts. Other customers, such as those with private banking accounts and those of foreign government officials, are subjected to enhanced due diligence because the law deems that those accounts are at a higher risk for money laundering. All accounts are subject to ongoing monitoring, in which internal bank software scrutinizes transactions and flags for manual inspection those that fall outside specific parameters. If a manual inspection reveals that the transaction is suspicious, the institution should file a
Suspicious Activity Report In financial regulation, a Suspicious Activity Report (SAR) or Suspicious Transaction Report (STR) is a report made by a financial institution about suspicious or potentially suspicious activity. The criteria to decide when a report must be ma ...
. The regulators of the industries involved are responsible to ensure that the financial institutions comply with the BSA. For example, the
Federal Reserve The Federal Reserve System (often shortened to the Federal Reserve, or simply the Fed) is the central banking system of the United States of America. It was created on December 23, 1913, with the enactment of the Federal Reserve Act, after a ...
and the
Office of the Comptroller of the Currency The Office of the Comptroller of the Currency (OCC) is an independent bureau within the United States Department of the Treasury that was established by the National Currency Act of 1863 and serves to charter, regulate, and supervise all nation ...
regularly inspect banks, and may impose civil fines or refer matters for criminal prosecution for non-compliance. A number of banks have been fined and prosecuted for failure to comply with the BSA. Most famously,
Riggs Bank Riggs Bank was a bank headquartered in Washington, D.C. For most of its history, it was the largest bank headquartered in that city. On May 13, 2005, after the exposure of several money laundering scandals, the bank was acquired by PNC Financ ...
, in Washington D.C., was prosecuted and functionally driven out of business as a result of its failure to apply proper money laundering controls, particularly as it related to foreign political figures. In addition to the BSA, the U.S. imposes controls on the movement of currency across its borders, requiring individuals to report the transportation of cash in excess of US$10,000 on a form called Report of International Transportation of Currency or Monetary Instruments (known as a CMIR). Likewise, businesses, such as automobile dealerships, that receive cash in excess of US$10,000 must file a Form 8300 with the Internal Revenue Service, identifying the source of the cash. On 1 September 2010, the
Financial Crimes Enforcement Network The Financial Crimes Enforcement Network (FinCEN) is a bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions in order to combat domestic and international money laundering, terr ...
issued an advisory on "
informal value transfer system An informal value transfer system (IVTS) is any system, mechanism, or network of people that receives money for the purpose of making the funds or an equivalent value payable to a third party in another geographic location, whether or not in the s ...
s" referencing ''
United States v. Banki ''United States v. Banki'', 685 F.3d 99 (2nd Cir. 2011) is a case related to the transfer of large amounts of money — totaling some $3.4 million — from Iran to the United States. Banki was charged with conspiracy to violate the Iranian Transac ...
''. In the United States, there are perceived consequences of anti-money laundering (AML) regulations. These
unintended consequences In the social sciences, unintended consequences (sometimes unanticipated consequences or unforeseen consequences) are outcomes of a purposeful action that are not intended or foreseen. The term was popularised in the twentieth century by Ameri ...
include FinCEN's publishing of a list of "risky businesses", which many believe unfairly targeted money service businesses. The publishing of this list and the subsequent fall-out, banks indiscriminately de-risking MSBs, is referred to as
Operation Choke Point Operation Choke Point was an initiative of the United States Department of Justice beginning in 2013 which investigated banks in the United States and the business they did with firearm dealers, payday lenders, and other companies believed to be a ...
. The Financial Crimes Enforcement Network issued a Geographic Targeting Order to combat against illegal money laundering in the United States. This means that title insurance companies in the U.S. are required to identify the natural persons behind companies that pay all cash in residential real estate purchases over a particular amount in certain U.S. cities.


Criminal sanctions

Money laundering has been criminalized in the United States since the
Money Laundering Control Act The Money Laundering Control Act of 1986 ( Public Law 99-570) is a United States Act of Congress that made money laundering a federal crime. It was passed in 1986. It consists of two sections, and . It for the first time in the United States c ...
of 1986. The law, contained at section 1956 of Title 18 of the United States Code, prohibits individuals from engaging in a financial transaction with proceeds that were generated from certain specific crimes, known as "specified unlawful activities" (SUAs). The law requires that an individual specifically intend in making the transaction to conceal the source, ownership or control of the funds. There is no minimum threshold of money, and no requirement that the transaction succeeded in actually disguising the money. A "financial transaction" has been broadly defined, and need not involve a financial institution, or even a business. Merely passing money from one person to another, with the intent to disguise the source, ownership, location or control of the money, has been deemed a financial transaction under the law. The possession of money without either a financial transaction or an intent to conceal is not a crime in the United States. Besides money laundering, the law contained in section 1957 of Title 18 of the United States Code, prohibits spending more than US$10,000 derived from an SUA, regardless of whether the individual wishes to disguise it. It carries a lesser penalty than money laundering, and unlike the money laundering statute, requires that the money pass through a financial institution. According to the records compiled by the United States Sentencing Commission, in 2009, the United States Department of Justice typically convicted a little over 81,000 people; of this, approximately 800 are convicted of money laundering as the primary or most serious charge. The
Anti-Drug Abuse Act The Anti-Drug Abuse Act of 1986 was a law pertaining to the War on Drugs passed by the U.S. Congress and signed into law by U.S. President Ronald Reagan. Among other things, they changed the system of federal supervised release from a rehabilita ...
of 1988 expanded the definition of financial institution to include businesses such as car dealers and real estate closing personnel and required them to file reports on large currency transaction. It required verification of identity of those who purchase monetary instruments over $3,000. The Annunzio-Wylie Anti-Money Laundering Act of 1992 strengthened sanctions for BSA violations, required so called "Suspicious Activity Reports" and eliminated previously used "
Criminal Referral A criminal referral or criminal recommendation is a notice to a prosecutory body, recommending criminal investigation or prosecutor, prosecution of one or more entities for crimes which fall into that body's jurisdiction. In the Federal governmen ...
Forms", required verification and recordkeeping for wire transfers and established the Bank Secrecy Act Advisory Group (BSAAG). The Money Laundering Suppression Act from 1994 required banking agencies to review and enhance training, develop anti-money laundering examination procedures, review and enhance procedures for referring cases to law enforcement agencies, streamlined the
currency transaction report A currency transaction report (CTR) is a report that U.S. financial institutions are required to file with FinCEN for each deposit, withdrawal, exchange of currency, or other payment or transfer, by, through, or to the financial institution which i ...
exemption process, required each
money services business A money services business (MSB) is a legal term used by financial regulators to describe businesses that transmit or convert money. The definition was created to encompass more than just banks which normally provide these services to include non-ba ...
(MSB) to be registered by an owner or controlling person, required every MSB to maintain a list of businesses authorized to act as agents in connection with the financial services offered by the MSB, made operating an unregistered MSB a federal crime, and recommended that states adopt uniform laws applicable to MSBs. The Money Laundering and Financial Crimes Strategy Act of 1998 required banking agencies to develop anti-money laundering training for examiners, required the Department of the Treasury and other agencies to develop a "National Money Laundering Strategy", created the "High Intensity Money Laundering and Related Financial Crime Area" (HIFCA) Task Forces to concentrate law enforcement efforts at the federal, state and local levels in zones where money laundering is prevalent. HIFCA zones may be defined geographically or can be created to address money laundering in an industry sector, a financial institution, or group of financial institutions. The Intelligence Reform & Terrorism Prevention Act of 2004 amended the Bank Secrecy Act to require the
Secretary of the Treasury The United States secretary of the treasury is the head of the United States Department of the Treasury, and is the chief financial officer of the federal government of the United States. The secretary of the treasury serves as the principal a ...
to prescribe regulations requiring certain financial institutions to report cross-border electronic transmittals of funds, if the Secretary determines that reporting is "reasonably necessary" in "anti-money laundering /combatting financing of terrorists (Anti-Money Laundering/Combating the Financing of Terrorism AML/CFT)."


Notable cases

*
Bank of Credit and Commerce International The Bank of Credit and Commerce International (BCCI) was an international bank founded in 1972 by Agha Hasan Abedi, a Pakistani financier. The bank was registered in Luxembourg with head offices in Karachi and London. A decade after opening, BCC ...
: Unknown amount, estimated in billions, of criminal proceeds, including drug trafficking money, laundered during the mid-1980s. *
Bank of New York The Bank of New York Mellon Corporation, commonly known as BNY Mellon, is an American investment banking services holding company headquartered in New York City. BNY Mellon was formed from the merger of The Bank of New York and the Mellon Financ ...
: US$7 
billion Billion is a word for a large number, and it has two distinct definitions: *1,000,000,000, i.e. one thousand million, or (ten to the ninth power), as defined on the short scale. This is its only current meaning in English. * 1,000,000,000,000, i.e ...
of Russian
capital flight Capital flight, in economics, occurs when assets or money rapidly flow out of a country, due to an event of economic consequence or as the result of a political event such as regime change or economic globalization. Such events could be an increas ...
laundered through accounts controlled by bank executives, late 1990s. *
BNP Paribas BNP Paribas is a French international banking group, founded in 2000 from the merger between Banque Nationale de Paris (BNP, "National Bank of Paris") and Paribas, formerly known as the Banque de Paris et des Pays-Bas. The full name of the grou ...
, in June 2014, pleaded guilty to falsifying
business records A business record is a document (hard copy or digital) that records an "act, condition, or event" related to business. Business records include meeting minutes, memoranda, employment contracts, and accounting source documents. It must be retriev ...
and
conspiracy A conspiracy, also known as a plot, is a secret plan or agreement between persons (called conspirers or conspirators) for an unlawful or harmful purpose, such as murder or treason, especially with political motivation, while keeping their agree ...
, having violated
U.S. sanctions After the failure of the Embargo Act of 1807, the federal government of the United States took little interest in imposing embargoes and economic sanctions against foreign countries until the 20th century. United States trade policy was entirely a ...
against Cuba, Iran, and Sudan. It agreed to pay an $8.9 billion fine, the largest ever for violating U.S. sanctions. * BSI Bank, in May 2017, was shut down by the
Monetary Authority of Singapore The Monetary Authority of Singapore (MAS) is the central bank and financial regulatory authority of Singapore. It administers the various statutes pertaining to money, banking, insurance, securities and the financial sector in general, as well ...
for serious breaches of anti-money laundering requirements, poor management oversight of the bank's operations, and gross misconduct of some of the bank's staff. *
BTA Bank BTA Bank ( kk, БТА; БТА Банкі; BTA Banki) (''BTA Bank Joint-Stock Company'' in full) is a Kazakhstan bank with headquarters in Almaty. it was the third largest lender by assets. In 2009, BTA Bank was subject of one of the world's bi ...
: $6 billion of bank funds embezzled or fraudulently loaned to shell companies and offshore holdings by the banks former chairman and CEO
Mukhtar Ablyazov Mukhtar Qabyluly Ablyazov ( kk, Мұхтар Қабылұлы Әблязов, ''Muhtar Qabyluly Ábliazov''; born 16 May 1963) is a Kazakh businessman and political activist who served as chairman of Bank Turan Alem (BTA Bank), and is a co-fou ...
. *
Charter House Bank A charter is the grant of authority or rights, stating that the granter formally recognizes the prerogative of the recipient to exercise the rights specified. It is implicit that the granter retains superiority (or sovereignty), and that the re ...
: Charter House Bank in Kenya was placed under statutory management in 2006 by the
Central Bank of Kenya The Central Bank of Kenya (CBK) ( sw, Banki Kuu ya Kenya) is the monetary authority of Kenya. Its head office is located in Nairobi. CBK was founded by in 1966 after the dissolution of East African Currency Board (EACB). Dr. Patrick Ngugi Njoroge ...
after it was discovered the bank was being used for money laundering activities by multiple accounts containing missing customer information. More than $1.5 billion had been laundered before the scam was uncovered. *
Danske Bank Danske Bank A/S is a Danish multinational banking and financial services corporation. Headquartered in Copenhagen, it is the largest bank in Denmark and a major retail bank in the northern European region with over 5 million retail customers. ...
+
Swedbank Swedbank AB () is a Nordic-Baltic banking group based in Stockholm, Sweden, offering retail banking, asset management, financial, and other services. In 2019 Swedbank had 900,000 private and 130,000 corporate clients and a 60% market share of ...
: $30 billion – $230 billion US dollars laundered through its Estonian branch. This was revealed on 19 September 2018. Investigations by Denmark, Estonia, the U.K. and the U.S. were joined by France in February 2019. On 19 February 2019, Danske Bank announced that it would cease operating in Russia and the Baltic States. This statement came shortly after Estonia's banking regulator Finantsinspektsioon announced that they would close the Estonian branch of Danske Bank. The investigation has grown to include Swedbank, which may have laundered $4.3 billion. More at
Danske Bank money laundering scandal The Danske Bank money laundering scandal arose in 2017-2018, when it became known that around €200 billion of suspicious transactions had flowed from Estonian, Russian, Latvian and other sources through the Estonia-based bank branch of Denmark- ...
. *
Deutsche Bank Deutsche Bank AG (), sometimes referred to simply as Deutsche, is a German multinational investment bank and financial services company headquartered in Frankfurt, Germany, and dual-listed on the Frankfurt Stock Exchange and the New York Sto ...
was accused in a vast money laundering scheme, dubbed the
Global Laundromat The Russian Laundromat was a scheme to move $20–80 billion out of Russia from 2010 to 2014 through a network of global banks, many of them in Moldova and Latvia. The ''Guardian'' reported that around 500 people were suspected of being inv ...
, involving secret Russian accounts that were transferred from
European Union The European Union (EU) is a supranational political and economic union of member states that are located primarily in Europe. The union has a total area of and an estimated total population of about 447million. The EU has often been des ...
banks in
Estonia Estonia, formally the Republic of Estonia, is a country by the Baltic Sea in Northern Europe. It is bordered to the north by the Gulf of Finland across from Finland, to the west by the sea across from Sweden, to the south by Latvia, a ...
,
Latvia Latvia ( or ; lv, Latvija ; ltg, Latveja; liv, Leţmō), officially the Republic of Latvia ( lv, Latvijas Republika, links=no, ltg, Latvejas Republika, links=no, liv, Leţmō Vabāmō, links=no), is a country in the Baltic region of ...
and
Cyprus Cyprus ; tr, Kıbrıs (), officially the Republic of Cyprus,, , lit: Republic of Cyprus is an island country located south of the Anatolian Peninsula in the eastern Mediterranean Sea. Its continental position is disputed; while it is geo ...
between 2010 and 2014. Newspaper sources estimated the total value of laundered currency to be as high as $80bn. The bank is also under investigation for its involvement in Europe's biggest banking scandal through Denmark's
Danske Bank Danske Bank A/S is a Danish multinational banking and financial services corporation. Headquartered in Copenhagen, it is the largest bank in Denmark and a major retail bank in the northern European region with over 5 million retail customers. ...
, which laundered €200bn, also from Russian sources. *
United Arab Emirates The United Arab Emirates (UAE; ar, اَلْإِمَارَات الْعَرَبِيَة الْمُتَحِدَة ), or simply the Emirates ( ar, الِْإمَارَات ), is a country in Western Asia (The Middle East). It is located at th ...
Dubai Islamic Bank The Dubai Islamic Bank (DIB) is an Islamic bank in Dubai, established in 1975 by Haj Saeed Bin Ahmed Al Lootah. It is the first Islamic bank in the world to have incorporated the principles of Islam in all its practices and is the largest Islamic ...
was accused of “knowingly and purposefully” providing “financial services and other forms of material support to
al-Qaeda Al-Qaeda (; , ) is an Islamic extremism, Islamic extremist organization composed of Salafist jihadists. Its members are mostly composed of Arab, Arabs, but also include other peoples. Al-Qaeda has mounted attacks on civilian and military ta ...
operatives” when the terrorist group was planning the execution of the
September 11 attacks The September 11 attacks, commonly known as 9/11, were four coordinated suicide terrorist attacks carried out by al-Qaeda against the United States on Tuesday, September 11, 2001. That morning, nineteen terrorists hijacked four commercia ...
against the United States. In addition, the
Sharjah Sharjah (; ar, ٱلشَّارقَة ', Gulf Arabic: ''aš-Šārja'') is the third-most populous city in the United Arab Emirates, after Dubai and Abu Dhabi, forming part of the Dubai-Sharjah-Ajman metropolitan area. Sharjah is the capital o ...
branch of
Standard Chartered Bank Standard Chartered plc is a multinational bank with operations in consumer, corporate and institutional banking, and treasury services. Despite being headquartered in the United Kingdom, it does not conduct retail banking in the UK, and around ...
was also involved in opening the accounts of the terror operatives and allowing financial transactions to take place between them and
Khalid Sheikh Mohammed Khalid Sheikh Mohammed (sometimes also spelled Shaikh; also known by at least 50 pseudonyms; born March 1, 1964 or April 14, 1965) is a Pakistani Islamist militant held by the United States at the Guantanamo Bay detention camp under terrorism-re ...
, “the principal architect of the 9/11 attacks”. *
FinCEN Files The FinCEN Files are documents from the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN), that have been leaked to '' BuzzFeed News'' and the International Consortium of Investigative Journalists (ICIJ), and published globally on 20 ...
: On 21 September 2020, The
International Consortium of Investigative Journalists The International Consortium of Investigative Journalists, Inc. (ICIJ), is an independent global network of 280 investigative journalists and over 140 media organizations spanning more than 100 countries. It is based in Washington, D.C. with pe ...
(ICIJ) revealed FinCEN Files, about the involvement of about $2tn of transactions by some of the world's biggest banks. FinCEN files also revealed that Dubai-based Gunes General Trading, based in Dubai funneled Iranian state money via UAE's central banking system and processed $142 million in 2011 and 2012. *
Fortnite ''Fortnite'' is an online video game developed by Epic Games and released in 2017. It is available in three distinct game mode versions that otherwise share the same general gameplay and game engine: ''Fortnite Battle Royale'', a free-to-p ...
. In 2018 Cybersecurity firm Sixgill posed as customers and discovered that stolen credit card details may be used to purchase Fortnite's
in-game currency A virtual economy (or sometimes synthetic economy) is an emergent economy existing in a virtual world, usually exchanging virtual goods in the context of an online game, particularly in massively multiplayer online games (MMOs). People enter th ...
(V-Bucks) then in-game purchases, to be sold for "clean" money.
Epic Games Epic Games, Inc. is an American video game and software developer and publisher based in Cary, North Carolina. The company was founded by Tim Sweeney as Potomac Computer Systems in 1991, originally located in his parents' house in Potomac, M ...
, the makers of Fortnite, responded by urging customers to secure their accounts. *
HSBC HSBC Holdings plc is a British multinational universal bank and financial services holding company. It is the largest bank in Europe by total assets ahead of BNP Paribas, with US$2.953 trillion as of December 2021. In 2021, HSBC had $10.8 tri ...
, in December 2012, paid a record $1.9 Billion fines for money-laundering hundreds of millions of dollars for drug traffickers, terrorists and sanctioned governments such as Iran. The money-laundering occurred throughout the 2000s. *
Institute for the Works of Religion The Institute for the Works of Religion ( it, Istituto per le Opere di Religione; la, Institutum pro Operibus Religionis; abbreviated IOR), commonly known as the Vatican Bank, is a financial institution situated inside Vatican City and run by a ...
: Italian authorities investigated suspected money laundering transactions amounting to US$218 million made by the
IOR The abbreviation IOR may refer to: * Importer of record, term in import and export * inclusive or - as opposed to XOR (exclusive OR) * Independent Order of Rechabites * Index of refraction * India Office Records * Indian Ocean Region * Indian Ocea ...
to several Italian banks. *
Liberty Reserve Liberty Reserve was a Costa Rica-based centralized digital currency service that billed itself as the "oldest, safest and most popular payment processor, serving millions all around a world". The site had over one million users when it was shut ...
, in May 2013, was seized by United States federal authorities for laundering $6 billion. *
Nauru Nauru ( or ; na, Naoero), officially the Republic of Nauru ( na, Repubrikin Naoero) and formerly known as Pleasant Island, is an island country and microstate in Oceania, in the Central Pacific. Its nearest neighbour is Banaba Island in Ki ...
: US$70 billion of Russian capital flight laundered through unregulated Nauru offshore shell banks, late 1990s *
Sani Abacha Sani Abacha (20 September 1943 – 8 June 1998) was a Nigerian military officer and politician who ruled as the military head of state of Nigeria from 1993 until his death in 1998. He seized power on 17 November 1993 in the last successful c ...
: US$2–5 billion of government assets laundered through banks in the UK, Luxembourg, Jersey (Channel Islands), and Switzerland, by the president of Nigeria. *
Standard Bank Standard Bank Group Limited is a major South African bank and financial services group. It is Africa's biggest lender by assets. The company's corporate headquarters, Standard Bank Centre, is situated in Simmonds Street, Johannesburg. History ...
: Standard Bank South Africa London Branch – The Financial Conduct Authority (FCA) has fined Standard Bank PLC (Standard Bank) £7,640,400 for failings relating to its anti-money laundering (AML) policies and procedures over corporate and private bank customers connected to
politically exposed person In financial regulation, a politically exposed person (PEP) is one who has been entrusted with a prominent public function. A PEP generally presents a higher risk for potential involvement in bribery and corruption by virtue of their position and ...
s (PEPs). *
Standard Chartered Standard Chartered plc is a multinational bank with operations in consumer, corporate and institutional banking, and treasury services. Despite being headquartered in the United Kingdom, it does not conduct retail banking in the UK, and around 9 ...
: paid $330 million in fines for money-laundering hundreds of billions of dollars for Iran. The money-laundering took place in the 2000s and occurred for "nearly a decade to hide 60,000 transactions worth $250 billion". *
Westpac Westpac Banking Corporation, known simply as Westpac, is an Australian multinational banking and financial services company headquartered at Westpac Place in Sydney, New South Wales. Established in 1817 as the Bank of New South Wales, it ...
: On 24 September 2020, Westpac and AUSTRAC agreed to a AUD $1.3 billion penalty over Westpac's breaches of the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 - the largest fine ever issued in Australian corporate history.


Individuals

*Jose Franklin Jurado-Rodriguez, a
Harvard College Harvard College is the undergraduate college of Harvard University, an Ivy League research university in Cambridge, Massachusetts. Founded in 1636, Harvard College is the original school of Harvard University, the oldest institution of higher lea ...
and
Columbia University Columbia University (also known as Columbia, and officially as Columbia University in the City of New York) is a private research university in New York City. Established in 1754 as King's College on the grounds of Trinity Church in Manhatt ...
Graduate School of Arts and Sciences Economics Department alumnus, was convicted in Luxembourg in June 1990 "in what was one of the largest drug money laundering cases ever brought in Europe" and the US in 1996 of money laundering for the
Cali Cartel The Cali Cartel ( es, Cartel de Cali) was a drug cartel based in southern Colombia, around the city of Cali and the Valle del Cauca. Its founders were the brothers Gilberto Rodríguez Orejuela and Miguel Rodríguez Orejuela. They broke away fr ...
kingpin Jose Santacruz Londono. Jurado-Rodriguez specialized in " smurfing". *
Ng Lap Seng David Ng Lap Seng (; born June 1948) is a Macau-based Chinese billionaire real estate businessman, chairman of the Sun Kian Ip Group (新建业集团). He is a member of the National Committee of the Chinese People's Political Consultative Con ...
: The Chinese billionaire real estate developer from
Macau Macau or Macao (; ; ; ), officially the Macao Special Administrative Region of the People's Republic of China (MSAR), is a city and special administrative region of China in the western Pearl River Delta by the South China Sea. With a pop ...
was sentenced to four years in prison in May 2018 for bribing two diplomats, including former president of the
United Nations General Assembly The United Nations General Assembly (UNGA or GA; french: link=no, Assemblée générale, AG) is one of the six principal organs of the United Nations (UN), serving as the main deliberative, policymaking, and representative organ of the UN. Curr ...
,
John William Ashe John William Ashe (20 August 1954 – 22 June 2016) was a Antiguan diplomat and politician. He was the President of the United Nations General Assembly at its 68th session, which ran September 2013 to September 2014. He was also President of the ...
, to help him build a conference center in Macau for the United Nations Office for South-South Cooperation (UNOSSC), headed by Director
Yiping Zhou Yiping Zhou (周一平; born 1955) is thSpecial Envoy of the Director-General of the World Women Organization (WWO) and Chief Advisor of the WWO and was the United Nations Envoy on South-South Cooperation. Prior to this appointment of 30 May 2014 ...
. The corruption case was the worst financial scandal for the United Nations since the abuse of the Iraqi
oil-for-food program The Oil-for-Food Programme (OIP), established by the United Nations in 1995 (under UN Security Council Resolution 986) was established to allow Iraq to sell oil on the world market in exchange for food, medicine, and other humanitarian needs fo ...
more than 20 years ago. Ng Lap Seng, 69, was convicted in Federal District Court in Manhattan on two counts of violating the
Foreign Corrupt Practices Act The Foreign Corrupt Practices Act of 1977 (FCPA) (, ''et seq.'') is a United States federal law that prohibits U.S. citizens and entities from bribing foreign government officials to benefit their business interests. The FCPA is applicable world ...
, one count of paying bribes, one count of money laundering, and two counts of conspiracy. *
Ferdinand Marcos Ferdinand Emmanuel Edralin Marcos Sr. ( , , ; September 11, 1917 – September 28, 1989) was a Filipino politician, lawyer, dictator, and kleptocrat who was the 10th president of the Philippines from 1965 to 1986. He ruled under martial ...
: Unknown amount, estimated at US$10 billion of government assets laundered through banks and financial institutions in the United States, Liechtenstein, Austria, Panama, Netherlands Antilles, Cayman Islands, Vanuatu,
Hong Kong Hong Kong ( (US) or (UK); , ), officially the Hong Kong Special Administrative Region of the People's Republic of China ( abbr. Hong Kong SAR or HKSAR), is a city and special administrative region of China on the eastern Pearl River Delt ...
, Singapore, Monaco, the Bahamas, the Vatican and Switzerland.


See also

*
2011 Iranian embezzlement scandal The 3,000 billion Iranian toman, toman embezzlement scandal in Iran (also 2,800 billion embezzlement; approximately US$943.5 million) was a Corruption in Iran, corruption scandal involving the use of forged documents to obtain credit from at least ...
*
Allen Stanford Robert Allen Stanford (born March 24, 1950) is an American financial fraudster, former financier, and sponsor of professional sports. He is serving a 110-year federal prison sentence, having been convicted in 2012 of fraud, on charges that his i ...
*
Avo Viiol Avo Viiol (sometimes also spelled as Aavo Viiol; born 5 August 1958) is a former head of and a famous Estonian embezzler. Between December 1999 and August 2002, Viiol, then working as head of the Estonian Culture Fund, embezzled the Fund of 8, ...
*
Azerbaijani laundromat The Azerbaijani laundromat is a complex money-laundering scheme organized by Azerbaijan that was revealed by the Organized Crime and Corruption Reporting Project (OCCRP) in September 2017. The investigations exposed that during two years between 2 ...
*
Bank Secrecy Act The Bank Secrecy Act of 1970 (BSA), also known as the Currency and Foreign Transactions Reporting Act, is a U.S. law requiring financial institutions in the United States to assist U.S. government agencies in detecting and preventing money laund ...
*
Charles Ponzi Charles Ponzi (, ; born Carlo Pietro Giovanni Guglielmo Tebaldo Ponzi; March 3, 1882 – January 15, 1949) was an Italian swindler and con artist who operated in the U.S. and Canada. His aliases included ''Charles Ponci'', ''Carlo'', and ''Cha ...
*
Confiscation Confiscation (from the Latin ''confiscatio'' "to consign to the ''fiscus'', i.e. transfer to the treasury") is a legal form of seizure by a government or other public authority. The word is also used, popularly, of spoliation under legal forms, o ...
*
Corruption charges against Suharto Investigations into allegations of corruption against Indonesian former president/dictator Suharto began immediately after his 32-year rule. In ''Global Transparency Report,'' made by Transparency International in 2004, he was ranked as the world ...
*
Currency transaction report A currency transaction report (CTR) is a report that U.S. financial institutions are required to file with FinCEN for each deposit, withdrawal, exchange of currency, or other payment or transfer, by, through, or to the financial institution which i ...
*
Customer Identification Program A Customer Identification Program (CIP) is a United States requirement, where financial institutions need to verify the identity of individuals wishing to conduct financial transactions with them and is a provision of the USA Patriot Act. More co ...
*
Danske Bank money laundering scandal The Danske Bank money laundering scandal arose in 2017-2018, when it became known that around €200 billion of suspicious transactions had flowed from Estonian, Russian, Latvian and other sources through the Estonia-based bank branch of Denmark- ...
*
Defalcation Defalcation is misappropriation of funds by a person trusted with their charge; also, the act of misappropriation, or an instance thereof. The term is more specifically used by the United States Bankruptcy Code to describe a category of acts that t ...
*
Embezzlement Embezzlement is a crime that consists of withholding assets for the purpose of conversion of such assets, by one or more persons to whom the assets were entrusted, either to be held or to be used for specific purposes. Embezzlement is a type ...
*
FBI The Federal Bureau of Investigation (FBI) is the domestic Intelligence agency, intelligence and Security agency, security service of the United States and its principal Federal law enforcement in the United States, federal law enforcement age ...
*
Financial Action Task Force on Money Laundering The Financial Action Task Force (on Money Laundering) (FATF), also known by its French name, ''Groupe d'action financière'' (GAFI), is an intergovernmental organisation founded in 1989 on the initiative of the G7 to develop policies to combat m ...
*
Financial Crimes Enforcement Network The Financial Crimes Enforcement Network (FinCEN) is a bureau of the United States Department of the Treasury that collects and analyzes information about financial transactions in order to combat domestic and international money laundering, terr ...
*
FinCEN Files The FinCEN Files are documents from the U.S. Treasury's Financial Crimes Enforcement Network (FinCEN), that have been leaked to '' BuzzFeed News'' and the International Consortium of Investigative Journalists (ICIJ), and published globally on 20 ...
* Gold laundering *
Graft (politics) Graft, as understood in American English, is a form of political corruption defined as the unscrupulous use of a politician's authority for personal gain. Political graft occurs when funds intended for public projects are intentionally misdire ...
*
Harriette Walters Harriette Walters (born c. 1956) is a former civil servant who worked as a tax assessments manager for the District of Columbia. She was convicted of being the central participant in the largest fraud scheme ever perpetrated by a District of Colum ...
*
Hawala Hawala or hewala ( ar, حِوالة , meaning ''transfer'' or sometimes ''trust''), also known as in Persian, and or in Somali, is a popular and informal value transfer system based on the performance and honour of a huge network of money b ...
* Michael H. O'Keefe *
Money trail "Follow the money" is a catchphrase popularized by the 1976 docudrama film ''All the President's Men'', which suggests political corruption can be brought to light by examining money transfers between parties. Origin For the film, screenwriter Wil ...
*
Mukhtar Ablyazov Mukhtar Qabyluly Ablyazov ( kk, Мұхтар Қабылұлы Әблязов, ''Muhtar Qabyluly Ábliazov''; born 16 May 1963) is a Kazakh businessman and political activist who served as chairman of Bank Turan Alem (BTA Bank), and is a co-fou ...
*
Office of Foreign Assets Control The Office of Foreign Assets Control (OFAC) is a financial intelligence and enforcement agency of the U.S. Treasury Department. It administers and enforces economic and trade sanctions in support of U.S. national security and foreign policy ob ...
*
Offshore banking An offshore bank is a bank regulated under international banking license (often called offshore license), which usually prohibits the bank from establishing any business activities in the jurisdiction of establishment. Due to less regulation and ...
*
Organized crime Organized crime (or organised crime) is a category of transnational, national, or local groupings of highly centralized enterprises run by criminals to engage in illegal activity, most commonly for profit. While organized crime is generally th ...
*
Operation Greenback Operation Greenback was a Miami, Florida-based, multi-agency U.S. government task force targeting money laundering connected to drug trafficking."Operation Greenback" in Ron Chepesiuk, ''The War on Drugs: An International Encyclopedia'' (ABC-CLIO, 1 ...
*
Penny stock scam A penny is a coin ( pennies) or a unit of currency (pl. pence) in various countries. Borrowed from the Carolingian denarius (hence its former abbreviation d.), it is usually the smallest denomination within a currency system. Presently, it is th ...
*
Politically exposed person In financial regulation, a politically exposed person (PEP) is one who has been entrusted with a prominent public function. A PEP generally presents a higher risk for potential involvement in bribery and corruption by virtue of their position and ...
*
Reputation laundering Reputation laundering occurs when a person or an organization conceals unethical, corrupt, or criminal behavior by performing highly-visible positive actions with the intent to improve their reputation and obscure their history. Reputation launderi ...
*
Round-tripping (finance) Round-tripping, also known as round-trip transactions or "Lazy Susans", is defined by ''The Wall Street Journal'' as a form of barter that involves a company selling "an unused asset to another company, while at the same time agreeing to buy back t ...
*
Russian Laundromat The Russian Laundromat was a scheme to move $20–80 billion out of Russia from 2010 to 2014 through a network of global banks, many of them in Moldova and Latvia. The ''Guardian'' reported that around 500 people were suspected of being in ...
*
Scott W. Rothstein Scott W. Rothstein (born June 10, 1962) is an American disbarred lawyer, convicted felon, and the former managing shareholder, chairman, and chief executive officer of the now-defunct Rothstein Rosenfeldt Adler law firm. He funded an extravag ...
*
Sholam Weiss Sholam Weiss (born 1954) is a convicted fraudster. In 2000, Weiss was sentenced to 845 years in prison for racketeering, wire fraud, money laundering, and other charges in connection to the collapse of the National Heritage Life Insurance C ...
*
Shell (corporation) A shell corporation is a company or corporation that exists only on paper and has no office and no employees, but may have a bank account or may hold passive investments or be the registered owner of assets, such as intellectual property, or s ...
*
Sponsorship scandal The sponsorship scandal, AdScam or Sponsorgate, was a scandal in Canada that came as a result of a federal government " sponsorship program" in the province of Quebec involving the Liberal Party of Canada, which was in power from 1993 to 2006. T ...
*
Terrorist financing Terrorism financing is the provision of funds or providing financial support to individual terrorists or non-state actors. Most countries have implemented measures to counter terrorism financing (CTF) often as part of their money laundering l ...
*
The Establishment ''The Establishment'' is a term used to describe a dominant social group , group or elite that controls a polity or an organization. It may comprise a closed social group that selects its own members, or entrenched elite structures in specific ...
*
The Route of the K-Money The Route of the K-Money ( es, La ruta del dinero K; "K" stands for "''Kirchnerism''") was a 2013 political scandal in Argentina. It began with reports on the ''Periodismo para todos'' television program on the results of its investigation, led ...
*
Tom Petters Thomas Joseph Petters is a former American businessman and chairman and CEO of Petters Group Worldwide, a company which stole over $2 billion in a Ponzi scheme. He was convicted of massive business fraud in 2009 and is now imprisoned at the Unit ...
*
Toni Musulin Toni Musulin ( sr-Cyrl, Тони Мусулин; born 8 June 1970) is a French man of Serb and Croat origin, and a former security van driver for the Loomis security firm. He is known for having stolen €11.6 million from the Banque de France wh ...
*
USA PATRIOT Act The USA PATRIOT Act (commonly known as the Patriot Act) was a landmark Act of Congress, Act of the United States Congress, signed into law by President of the United States, President George W. Bush. The formal name of the statute is the Uniti ...
*
White-collar crime The term "white-collar crime" refers to financially motivated, nonviolent or non-directly violent crime committed by individuals, businesses and government professionals. It was first defined by the sociologist Edwin Sutherland in 1939 as "a ...
* World Bank residual model *
Wood laundering Illegal logging is the harvest, transportation, purchase or sale of timber in violation of laws. The harvesting procedure itself may be illegal, including using corrupt means to gain access to forests; extraction without permission, or from a pro ...


References


External links

*
UNODC on money-laundering and countering the financing of terrorism
profile from the
United Nations Office on Drugs and Crime The United Nations Office on Drugs and Crime (UNODC; French: ''Office des Nations unies contre la drogue et le crime'') is a United Nations office that was established in 1997 as the Office for Drug Control and Crime Prevention by combining the ...

Financial Market Integrity Unit
of the
World Bank The World Bank is an international financial institution that provides loans and grants to the governments of low- and middle-income countries for the purpose of pursuing capital projects. The World Bank is the collective name for the Interna ...

International Narcotics Control Strategy Report
(INCSR), annual report issued by the
United States Department of State The United States Department of State (DOS), or State Department, is an executive department of the U.S. federal government responsible for the country's foreign policy and relations. Equivalent to the ministry of foreign affairs of other n ...
in March every year (prepared by
Bureau of International Narcotics and Law Enforcement Affairs The Bureau of International Narcotics and Law Enforcement Affairs (INL) is an agency that reports to the Under Secretary for Civilian Security, Democracy, and Human Rights within the Department of State. Under the umbrella of its general mis ...
) on country money laundering risk {{Corruption Commercial crimes Financial regulation Tax evasion Cover-ups Organized crime Funding of terrorism