FINANCE
The funds are deemed as illicit as they often originate from fraud , corruption , drug trafficking , or other unlawful activities or predicate crimes . Money laundering ( ML ) operations have serious negative impacts on global economies as well as local communities and so serious measures have to be put into place to deter individuals from these acts .
Based on the above it is very important that businesses and individuals that are at higher risk of being used as a “ tool ” for money laundering should follow the international and local guidelines given by the FATF and FIC respectively . Failure to do so not only harms your community but could result in reputational damage , financial penalties and even jail time .
With this being said , what are the common money laundering schemes and what can you do to prevent them ? To start with , although real-life money laundering and terrorist financing schemes can be large , complex and sometimes incredibly creative , they all tend to follow the same three steps .
The first is placement , this is where illicit funds are initially deposited into a legitimate financial system . The funds are then moved into the layering stage where it becomes separated from the illicit origins through layers of sequential movements , transactions , divisions , or consolidations . The idea here is to put space between the true source and its original origin . The final stage is integration . At this point , the illicit funds have been through so many different transactions that it is practically impossible to see the original source .
Once the illicit funds have been ‘ cleaned ’ the criminals can effectively use the money without raising suspicion , whether that be setting up a legitimate business or investment to provide ongoing benefits or a simple old-fashioned splashing out on a new house or the latest top of the range Mercedes or Range Rover .
Two Practical examples of common Money Laundering schemes and payment means preferred by money launderers .
57 JUNE / JULY 2023 SA Real Estate Investor Magazine