THREE TYPES OF MONEY LAUNDERING
Whether it’s a huge multi-national chain of affluent banks or a tiny credit union operation; the potential for money laundering and ways of carrying it out is always present.
The Egmont Group has produced a compilation of one hundred sanitized cases about the fight against money laundering from its member financial intelligence units (FIUs). Three of the most common types of money laundering schemes determined are as follows;
- Concealment within Business Structures
This scheme takes place when a launderer uses his/her legitimate business to conceal money originating from illegal activities or transactions. This is possible because the launderer as the owner has control over his legitimate business and also faces lower risk of information being passed on to authorities. Moreover, the financial institution which is used as a vehicle to pass funds may have reasons to be suspicious of unusual fluctuations in a personal account but at the same time perceive any fluctuations in the business account to be part of the business cycle. Hence, making it easier for the launderer to guise his illegal gains using his business account instead.
- Misuse of Legitimate Businesses
It is also common where a legitimate business is unknowingly used as a vehicle for money laundering. In such cases the business, popularly involving professional firms like that of lawyers, accountants etc, are well-respected and are perceived as least likely vehicles of money laundering, hence making them easy targets for launderers. Although the business owners may be acquitted in a money laundering investigation, their businesses face the risk of reputational loss. Going forward, such cases are expected to increase as money launderers face increasing vigilance by financial institutions and their unwillingness to accept large personal funds without question.
- Use of False Identities, Documents, or Straw Men
When ‘straw men’-individuals with no connection to the criminal, are used to handle and own assets, make deposits and withdrawals, is also one of the ways money laundering takes place. Similarly, the use of false identifications and documents (invoices, receipts, trade licenses, etc.) to open accounts and carry out transactions is pertinent in severing the link between asset and the original criminal.
Having listed these, there lays a hope to control the danger that the proceeds of financial crimes bring along in the financial system.