What is the Money Laundering?

Money laundering is a crime, so "What is money laundering?" Money Laundering is to ensure that the money that has been acquired illegally appears to have been obtained legitimately. In simpler terms, it is the process of turning the profit of illegal activity into a legitimate income. Money laundering, which is the process of concealing the proceeds of crime and integrating them into the legitimate financial system, is also a method used to hide the nature, source, location, situation, and movement of a crime or to give a legal image to the proceeds of crime. 

How Does Money Laundering Work?

Money laundering is essential for criminal organizations to use illegally obtained money effectively. The money laundering process usually consists of three steps: placement, layering, and integration.

Placement: The first entry of illegal money into the financial system is its settlement.

Layering: hides the source of money through a series of transactions and bookkeeping tricks.

Integration: the money laundered is withdrawn from the legitimate account to be used, and the money is returned to the criminal from the legitimate source.

Not only these three methods of money laundering but also There are methods other than. To illustrate;

In the export dream: it is a method frequently used in recent years in Europe. It can make it appear as exporting to any country on paper.

Earn money from the stock market: By buying a stock or buying bonds through brokers, money can be laundered and displayed as a business.

Antiques and paintings: Antiques or paintings are taken with money that cannot be transferred. Later, these are sold against foreign currency, and money is laundered. 

Electronic Money Laundering

Electronic money should provide an easy way to transfer value without revealing its identity, such as banknotes that are not tracked. Money can also be streamed through online auctions and sales, gambling websites and then turned back into real, usable, and non-traceable "clean" money. The newest form of money laundering includes cryptocurrencies like Bitcoin. Although not entirely anonymous, it is increasingly used in blackmail plans, drug trafficking, and other criminal activities due to their relative anonymity compared to more traditional currency forms.

What Is The Effect of Society Money Laundering?

If money laundering is not controlled and these crimes continue to be committed, this situation's social and political costs can be serious. In addition to these costs, money laundering's economic and political impact can weaken the social fabric, collective ethical standards, and ultimately the democratic institutions of society. In countries transitioning to democratic systems, this criminal influence can undermine the transition process.

What Should Businesses Do To Prevent Money Laundering?

In all steps from production to consumption, tax evasion should be prevented, and large money movements should be monitored.

  • Local governments should be fully authorized in the areas of them.
  • The media should fully support the fight against organized crime and should not broadcast to legendary mafia members.
  • In the private sector, cartels should be prevented, and the underground economy should be reduced by eliminating tax-free earnings as much as possible. 
  • Businesses can protect themselves from financial crimes and strengthen AML compliance processes using AML software such as Sanction Scanner.

Money Laundering in 5 Questions | Step by Step Guide