Thesis Paper On Anti-Money Laundering

Anti-Money Laundering

Money laundering is one of today’s widespread financial frauds that are met in all the parts of the world. It is a practice of disguising and changing origins of money that were obtained illegally. In this way, the proceeds of crime appear legitimate. The methods of money laundering vary greatly, some of them being simple and others complex.

There can be distinguished three steps in money laundering: placement, when cash appears in the financial system; layering, when financial transactions are performed to hide the actual source of money; integration, when funds are obtained by the criminal. These steps can be changed due to the peculiarities of each particular case.

There are different forms of money laundering and the most widely spread of them are the following: structuring or smurfing, when cash is broken into smaller amounts of money; cash-intensive businesses, when business has legal and illegal cash flows, but claims all earnings as legitimate; bulk cash smuggling, when cash is smuggled to another jurisdiction; black salaries, when companies have unregistered employees that receive cash payments; real estate, when it is purchased with illegal money, and then sold to receive legitimate income; and others.

Anti-money laundering is a complex of actions directed at financial institutions that are required to prevent and report any money laundering activities that they spot. Guidelines on anti-money laundering became globally known after September 11, 2001. Now financial institutions have to request as much information as possible from their clients, but in different countries these process vary. There is also anti-money laundering software developed and implemented in different institutions, which filters information received from clients and classifies it according to suspicion levels.