These activities are called Money laundering. The money earned from illegal sources, generally, from criminal activities is dirty money. Criminals try to make launder that type of money to escape from Law enforcement agencies. The post was written by Kaniz Suborna.
Explanation of Money Laundering
When large amounts of money generated by a criminal activity, such as drug trafficking or terrorist funding is being appeared as come from a legitimate source. This type of activities is considered dirty, and the process “launders” it to make it look clean. It is a financial crime. The criminals include white collar and street-level criminals.
Which Techniques Criminals use to Launder Illegal Money?
To make the dirty money criminal use online banking system. Mobile banking and app based money flow system also used in this crime. The prevention of money laundering has become an international concern.
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Three Step Process of Money Laundering
Criminals use banking system to launder dirty money. They put the money in three step process. The steps are listed bellow
Placement:
It puts the “dirty money” into the legitimate system of finance.
Layering:
It conceals the source of the money through a series of transactions and bookkeeping tricks.
Integration:
The now-laundered money is withdrawn from the legitimate account to be used for whatever purposes the criminals have in mind for it.
Example of Money Laundering
Mr. Jane (Anonymous) is a Petro US officer. He took bribe to sell oil in lowest price to a party. The bribe money figure is 100 million USD. He deposited 10 million USD in his bank accounts directly. It is placement.
There are many ways to launder money, from the simple to the very complex. One of the most common techniques is to use a legitimate, cash-based business. He make a restaurant in his city. He deposited another 90 Million USD to the restaurant bank account as restaurant income. It is Integration.
Then he withdrawn the money or transferred it to another bank account or another country or exchange with other currencies as falls importing goods. It is Layering.
A restaurant business is often referred to as “front”. Police cannot detect this type of laundering.
When Money Laundering cannot be detected?
The use of proxy servers and hide-help software makes the third component of money laundering. Changing IP address can escape from tracing. The Internet has put a new spin on the old crime. Online auctions, peer-to-peer (P2P) transfers and virtual gaming sites are money laundering platform in first world countries.
Can Governments Prevent Dirty Money from Converting into Laundered?
Banks can report large cash transactions and other suspicious money transfers that might be signs of laundering of the money, as criminals need currency exchange to launder the fund earned from criminal activities. Governments gave Central Banks the permission to trace transactions.
In recent decades, governments around the world are combating with money laundering. They made regulations that require financial institutions to put systems in place to detect and report suspicious activity.
In 1989, the Group of Seven (G-7) formed an international committee called the Financial Action Task Force (FATF) in an attempt to fight money laundering on an international scale.
What are the signs of money laundering?
According to Money Laundering Prevention Act 2012-
(1) Corruption and bribery;
(2) Counterfeiting currency;
(3) Counterfeiting deeds and documents;
(4) Extortion;
(5) Fraud;
(6) Forgery;
(7) Illegal trade of firearms;
(8) Illegal trade in narcotic drugs, psychotropic substances and substances causing intoxication;
(9) Illegal trade in stolen and other goods;
(10) Kidnapping, illegal restrain and hostage taking;
(11) Murder, grievous physical injury;
(12) Trafficking of women and children;
(13) Black marketing;
(14) Smuggling of domestic and foreign currency;
(15) Theft or robbery or dacoity or piracy or hijacking of aircraft;
(16) Human trafficking;
(17) Dowry;
(18) Smuggling and offences related to customs and excise duties;
(19) Tax related offences;
(20) Infringement of intellectual property rights;
(21) Terrorism or financing in terrorist activities;
(22) Adulteration or the manufacture of goods through infringement of title;
(23) Offences relating to the environment;
(24) Sexual exploitation;
(25) Insider trading and market manipulation using price sensitive information relating to the capital market in share transactions before it is published for general information to take advantage of the market and attempting to manipulate the market for personal or institutional gain;
(26) organized crime, and participation in organized criminal groups;
(27) Racketeering.
Punishment in BD for Money laundering Offence
According to money laundering act 2012
Section (2) Any person who commits or abets or conspires to commit the offence of money laundering, shall be punished with imprisonment for a term of at least 4(four) years but not exceeding 12(twelve) years and, in addition to that, a fine equivalent to the twice of the value of the property involved in the offence or taka 10(ten) lacks, whichever is greater.
Section (3) In addition to any fine or punishment, the court may pass an order to forfeit the property of the convicted person in favour of the State which directly or indirectly involved in or related with money laundering or any predicate offence.
Section (4) Any entity which commits an offence under this section shall be punished with a fine of not less than twice of the value of the property or taka 20(twenty) lacks, whichever is greater and in addition to this the registration of the said entity shall be liable to be cancelled.
Section (5) It shall not be a prerequisite to charge or punish for money laundering to be convicted or sentenced for any predicate offence.
- Punishment for violation of an order for freezing or attachment.– Any person who violates a freezing or attachment order issued under this Act shall be punished with imprisonment for a term not exceeding 3 (three) years or with a fine equivalent to the value of the property subject to freeze or attachment, or with both.
- Punishment for divulging information.– (1) No person shall, with an ill motive, divulge any information relating to the investigation or any other related information to any person, organization or news media.
Why Some Countries in a wrong way about Money Laundering?
Though Governments passed the Money Laundering Prevention Act to prevent money laundering, it is far away from the prevention of this crime with its policy to give chance criminals to make black money into white by giving taxes.
Sources:
- Money Laundering Prevention Act
- https://www.bb.org.bd/bfiu/bfiu_acts.php
- https://www.investopedia.com/terms/m/moneylaundering.asp