Money Laundering in 5 Questions | Step by Step Guide

In this content, we will explain money laundering in 5 questions. You can find all the basic information you need to know about money laundering with this content. Pleasant readings.


What is Money Laundering?


Money laundering; It is the process of showing the source of money obtained from illegal income as a legal income. It is not possible to use illegal revenues freely and in a short time because the revenues obtained from illegal activities are generally cash. Therefore, criminals aim to prevent the detection of their guilt by hiding criminal elements through money laundering activities. Money laundering is a dangerous crime. If detected, people who launder money are given large fines and prison sentences.


Why Money is Laundered?


Money is being laundered illegally to earn income, hide its source or change its shape. Because it is not possible to use the revenues obtained from illegal ways freely. In the event that it is determined that income is obtained through illegal means, those who earn such income will be sentenced to imprisonment and fines on the one hand, and on the other hand, they will be deprived of these revenues. Therefore, criminal organizations aim to increase their criminal activities by laundering illegal money.


What are the Methods Used for Money Laundering?


Various institutions and methods are used for money laundering. Some of these are described below with examples.


  • Smurfing: 

It is a method of preventing the reporting of the said transactions to the authorized institutions within the scope of providing continuous information or identification by making transactions under the legal limits brought by the countries regarding the obligation to provide continuous information and identification.


  • Opening an account with a fictitious or wrong name:

In order not to attract attention and to prevent control, the transaction is carried out entirely by the name of the fictive or someone else.


  • Partnering in crime with financial institutions:

With this type of transaction, in order to overcome the reporting obligation, it is ensured that the notification is not made by agreeing with the management or employee of the institution where the money is deposited above the notification amount.

A case study determined on the subject is as follows; illegal earnings were taken to the intermediary institution with the cooperation of personnel working in intermediary institutions and checks issued by the intermediary institution were received in return. These checks were deposited in the customer account opened by the brokerage house with fake names, and the funds in this account were used to buy bearer bonds and deposit certificates. Then, when the maturity date came, the coupon prices and interest rates of the bond were taken and deposit certificates were sold to be transferred to the bank account.



  • Benefiting from various companies:

In this method;

- Nonfunctional companies are used.

- Companies operating legally are used.

- Shell corporations are used.



  • Money laundering with workers:

It is a method used by money launderers with the idea that the remittance process of the workers working in developed countries to their relatives in their country will not attract attention.


  • Partnering in crime with foreign financial institutions:

It is a method of cooperation with cross-border centers and other foreign financial institutions.



  • Exchange offices:

It is the receipt of illegal income in cash by foreign exchange offices and placement into the financial system.



  • Cash smuggling:

In this method; The cash obtained from illegal activities is taken to countries where there are not a lot of obligations either by the persons serving as money courier or by any means. Later on, this cash is taken into the financial system in these countries.. As a result of these transactions, these funds, which are provided with legal images, can be sent directly to the country they were first acquired, or they can be sent in different countries and used without risk.


  • Prize money from chance games:

In this method; The winner of the jackpot is found by the launderers before he gets his jackpot, and he is given more money than the jackpot he has won. Then the grand prize is taken by the money launderer.


  • Casinos or etc. businesses:

In this method; cash held by the launderers is used to buy chips from casinos, but no gambling is played or played very little and the chips are replaced with checks taken from the casino. The checks in question are then deposited in a bank, the check prices are transferred from here to another country or used for the purchase of the real estate.

On the other hand, money can be transferred directly to the casino and in return, the money remaining after the commission can be converted into checks that are issued as gambling winnings. In both cases; Questions asked by money holders about the source of this money are answered as gambling winnings.


Why is It Necessary To Combat Money Laundering?


The laundering of black money has reached terrible dimensions today. Although it is impossible to determine the exact amount, it is estimated that billions of dollars of money laundering are committed every year. The source of black money is always illegal and especially drug trade is the leading one of these crimes. Especially behind the rising wave of terrorism in the world, drug traffic is often found. Drug traffic, which is in the hands of large mafia groups in the past years, is gradually under the control of terrorist organizations, and this development results in the fact that terrorist organizations, which pose a significant danger for each country, are easily out of control. Other activities include money smuggling, child and youth trade, white woman trade, organ trade, kidnapping, blackmail, and commercial fraud.


The illegal activities mentioned above create great social problems in every society. In addition, the increase in the amount of laundered money every day increases the power of the criminal organizations politically as well as their dominance in the state institutions. On the other hand, money laundering negatively affects national economies. For example; Although there is no change in the supply-demand amount of goods and services in the economy, sudden changes in the amount of money put on the market may cause fluctuations in prices.


The way to get rid of the social, economic and political problems caused by the crimes that constitute the source of money and money laundering crime is to destroy the organizations that commit these crimes. In this, it is necessary to prevent money laundering and money laundering that finances these organizations and to solve the problem at its source.


What are the Reasons for Choosing Off-Shore Financial Centres in Money Laundering?


Off Shore Financial Centers have a direct link with money laundering. Therefore, it is necessary to identify the reasons for the illegal use of these centers in general. In countries where cross-border centers are located or connected, there is no tax or very low rates. On the other hand, in these centers, the procedure for establishing banks and non-bank financial institutions is very simple, and the legal obligations that these financial institutions are subject to are almost non-existent. Namely; a bank can indirectly give credit to the group company in its own country through the bank established in these centers due to legal regulations.


Another reason for the illegal use of Off-Shore Financial Centers is money laundering. Money laundering can occur through financial institutions or shell companies in these countries. Since the banks or shell companies established in these centers are companies that are legal entity partners who cannot obtain information about their partnership structures or whose information is not available, and their real owners are not known, money laundering transactions are carried on freely without any restrictions and money can be transferred from anywhere in the world. The process of returning money to the owner as a loan is shown as one of the main methods used for money laundering.


The fight against money laundering is continued through local and global anti-money laundering laws and regulations. Sanction Scanner helps financial institutions detect and prevent financial crimes with AML solutions. You can contact Sanction Scanner to support your AML compliance.

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