MONEY LAUNDERING IN THE BANKING
TABLE OF CONTENS
| MONEY LAUNDERING – the concept An organized crime Why it is done??
| Stages and Process Of Money Laundering
| Vulnerability of the Financial System to Money Laundering
| Banking Sector: Medium, Regulator And Cause
| Private Banking And Money Laundering:
| What Banks Should Do?
| Indian Law For Prevention Of Money Laundering
| Law Enforcement Authorities
| Tax Havens And Money Laundering
| Case Studies
MONEY LAUNDERING – THE CONCEPT:
Money Laundering refers to the conversion or "Laundering" of money which is illegally obtained, so as to make it appear to originate from a legitimate source. Money Laundering is being employed by launderers worldwide to conceal criminal activity associated with it such as drug / arms trafficking, terrorism and extortion. Robinson states that
“Money laundering is called what it is because that perfectly describes what takes place – illegal, or dirty, money is put through a cycle of transactions, or washed, so that it comes out the other end as legal, or cleans money. In other words, the source of illegally obtained funds is obscured through a succession of transfers and deals in order that those same funds can eventually be made to appear as legitimate income.” Article 1 of EC Directive defines the term ‘money laundering’ as “the conversion of property, knowing that such property is derived from serious crime, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in the committing such an offence or offences to evade the legal consequences of his action, and the concealment or disguise of the true nature, source, location, disposition, movement, rights with respect to, or ownership of property, knowing that such property is derived from serious crime”. Thus, Money Laundering is not an independent crime, it depends upon another crime (predicate offence), the proceeds of which is the subject matter of the crime in money laundering. From the legal point of view, the Achilles’ heel in defining and criminalizing money laundering relates to the so-called ‘predicate offences’ understood as the criminal offences which generated the proceeds thus making laundering necessary. Hiding or disguising the source of certain proceeds will of course, not amount to money laundering unless these proceeds were obtained from a criminal activity. Therefore, what exactly amounts to money laundering, which actions and who can be prosecuted is largely dependant on what constitutes a predicate crime for the purpose of money laundering According to one political commentator it is all about deception, its aim is to convince relative authorities of the legal origin, existence and/or application of illegal sources of income and the subsequent possession of that income. Money laundering plays a fundamental role in facilitating the ambitions of drug traffickers, terrorists, organized crime syndicates, inside dealers, tax evaders as well as many others who need to avoid the kind of attention from authorities that sudden wealth brings from illegal activities. This facility is the placing of such proceeds beyond the reach of asset forfeiture laws. Hence, money laundering is an essential task carried out by all organized crime groups, and therefore if treated and analyzed properly could be the tool with which authorities could prosecute organized crime syndicates. This is a definition given with by one political commentator on the matter; the concept is still a subject of controversy in criminological parlance. Many of the definitions given by the individual FIUs in various countries are related to money laundering in...
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