21/04/2021Budgets & Other
Money laundering can adversely affect businesses, countries, and economies. It is a three-sided offense where money is generated illegally, concealed, and turned white. In this blog, we’d discuss what is money laundering, what’s the process of money laundering and we’d briefly talk about the adverse effects of money laundering.
What is Money Laundering?
It is the process of concealing money received from illegal practices and claiming it to receive from a legal origin. If successful, money laundering protects that dirty money on all legal grounds.
It is a serious financial offense that is practiced from small-level street criminals to international level criminals. It badly damages the finance system wherever practiced. However, anti-money laundering policies are implemented in many countries and large organizations to determine the perpetrators and to prevent this heinous crime.
Need to know the latest legislation on money laundering, contact us!
Process of Money Laundering:
Organizations that are involved in criminal practices wish to use illegal money legally. This process is very difficult as launderers need to provide proof to the bank showing them that their money came from legal sources. Typically, it consists of three steps:
1. Placement: The practice of bringing dirty money to the legal financial institution.
2. Layering: It is the process of erasing the money source through the chain of transaction and bookkeeping tricks.
3. Integration: The final process where laundered money is withdrawn from the financial institutions by the criminals.
There are many ways through which the money is laundered. The most commonly used method by criminals is to start a cash-based business. Like getting inflate money on cash receipt of a restaurant, depositing them on the restaurant’s account, and withdrawing them when needed.
If you want to combat money laundering within your organization, We can help. Get in touch now!
Adverse Effects of Money Laundering:
Money laundering drastically affects the financial sectors of a country that are the founding stones of economic growth. Besides, it promotes crimes especially drug trafficking and terrorism. As more drugs mean more health issues, frustration, and violence. Similarly, terrorism disturbs the country’s peace.
Moreover, money laundering promotes corruption that dreadfully affects the country’s economy. It reduces the revenue of the government. It has negative social and political effects and affects the business sector. As a whole, money laundering destabilizes a country.
Quick Wrap Up:
Hopefully, now you have got enough knowledge of what is money laundering, its process, and its consequences. You should remember that the effects of money laundering are far-reaching and intense on businesses, economies, and countries. Currently, digital banking and cryptocurrencies can be easy targets as it is easy to withdraw money, without being detected. Therefore, international organizations and governments should work together to combat this issue.
Disclaimer: This blog post provides basic information about money laundering.