Money laundering, a major financial crime, is making funds or money obtained through illegal means pretend to be legitimate. Criminals perform many money laundering techniques, and the techniques diversify and improve with the advancement of technology. Money laundering activities have a very negative effect on the economy. To mitigate these effects and prevent money laundering activities, international and local regulators have tough laws and regulations. All at-risk institutions such as financial institutions, estate agents, gaming, and gambling sectors must comply; otherwise, they will be punished by regulators.
It would be a mistake to think of money laundering as a criminal offense alone because when we look at it, money laundering is actually associated with many crimes. Examples of these crimes are related to smuggling, human trafficking, corruption, cybercrime, bribery, green crime, and illegal wildlife trade. In the rest of our article, you can learn about the relationship between money laundering and other crimes in detail.
Money Laundering and Trafficking
There are several types of trafficking, such as arms smuggling, human trafficking, tax evasion, drug and tobacco smuggling, alcohol smuggling. Obviously, all of these crimes have a lot to do with money laundering, but what exactly is this relationship? The money obtained through smuggling is quite high, and the funds obtained through illegal means cause a lot of losses in the economies of the country and negatively affect the economy. Suppose criminals use the income obtained through smuggling without laundering. In that case, they are very likely to be caught, and they convert the funds they have obtained illegally to legal money using the appropriate money-making techniques. Criminals make several small transactions to convert their funds into legitimate funds by spreading the money across many different accounts. They also use bank remittance, currency exchange, and mule accounts to transport money across borders. As a result, anyone who has committed any smuggling crimes uses money laundering methods to use their income and avoid getting caught.
Money Laundering and The Illegal Wildlife Trade (IWT)
The illegal wildlife trade (IWT), a growing threat to nature's biodiversity, becomes its most valuable illegal trade. As with other crimes, the negative impact of IWT on the economy is quite high. Laundering or withholding IWT revenues is highly detrimental to financial integrity. IWT criminals engage in billions of dollars in illegal trade through money laundering methods from similar wildlife products such as ivory, rhino horn, and snakeskin. Financial Action Task Force (FATF) published the Money Laundering and Illegal Wildlife Trafficking report in June 2020. In the FATF report, he generally evaluated how FATF standards should be applied to combat IWT. According to the FATF report, an estimated $ 7 to 23 billion in illegal wildlife trade per year. The methods of money laundering used to clear these revenues exploit the official financial sectors.
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Money Laundering and Green Crime
Green crime, one of the most lucrative illegal activities, is criminal organizations that threaten biodiversity and natural resources. Crimes such as illegal mining, fishing, logging, creating environmental pollution are examples of Green Crime. Contrary to popular belief, these crimes are a financial crime that harms nature and financial integrity. Green Crime is estimated to grow in the range of 5-7% each year, and this growth affects the global economy very negatively. Criminals may pretend that the money they earn from these jobs is legitimate income through money laundering. In addition, criminals can hide their useful property and trade in many jurisdictions.
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Money Laundering and Corruption
Money laundering activities are highly linked to corruption. So much so that there is always a money laundering crime hidden behind it if there is a corruption crime. Corruption is generally used to facilitate crimes such as prostitution, arms smuggling, and drug trafficking. On the other hand, money laundering techniques make it easier for the revenues obtained from these crimes to become legal. As a result, we see that many crimes can be interconnected, and these links are a situation that makes it very difficult to detect crimes.
Money Laundering and Cybercrime
Cybercrime is generally called the realization of crimes such as identity theft and fraud through electronic systems. With the development of technology, the possibility of committing crimes in a Virtual environment has increased considerably. Criminals can abuse the systems of financial institutions and carry out money laundering activities through cyber means. Some institutions are not well equipped to prevent these crimes. Cybercriminals use money laundering methods to turn their income earned through the internet mechanism into clean money. Criminals use online gambling and gaming sites to convert illegal money into legal money and perform these transactions using digital payment methods.
Money Laundering Methods
As we mentioned, many crimes are linked to money laundering and are almost the same because they are all linked. Criminals use money laundering techniques to convert the dirty money they obtain from criminal activities into clean money. Criminals need to know money laundering techniques as they are very likely to be caught unless they legalize this money. So what are these techniques? Smurfing: Avoiding continuous information and identification obligations and preventing the sharing of this information with the authorities opening an account with a fictitious: Opening accounts with identities that do not have any connection with the fictional reality and trading on these accounts Opening an account with a fictitious: People who win big bonuses are found by money launderers and exchanging money by offering more money than the bonus. As a result, those who launder money here turn their dirty money into clean money easily.
How to Prevent Money Laundering Activities?
To prevent these crimes, national and local regulators have laws and regulations, and all institutions at risk of money laundering must comply with these regulations. The basis of the regulations is the realization of Know Your Customer and Customer Due Diligence measures in institutions. With these measures, anonymous or fake accounts are detected, people can know who they really are, and their risks can be assessed. Regulators punish institutions that do not comply with regulations.
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