The financial industry has a widespread issue: money laundering. Not only is this practice a prevalent one, but it’s also incredibly difficult to eliminate. However, steps are constantly being made in an effort to minimize this threat – most notably with anti-money laundering (AML) regulations.
With this in mind, it’s important you are aware of widespread money laundering schemes. This knowledge can help you to better prepare, spot illegal activities, and prevent any laundering from occurring at all.
To further expand your knowledge, below are five key examples of money laundering activities.
1. Casino laundering
Certain films have made casinos a notorious place for laundering illegal funds. It’s as simple as someone going into the casino with their dirty cash, exchange it for chips, play a few games, cash in their chips, and walk away with clean money that’s disguised as their winnings.
2. Bank laundering
Bank laundering is another popular option for criminals. Rather than putting their money into an external bank, stock trader, mortgage company, and so on. they simply own a financial institution of their own. This makes it easy for them to transfer and move money through their institution.
Although the Bank Secrecy Act has helped to curtail money launderers to an extent, it remains a widespread problem.
Known also as smurfing, the practice of structuring involves taking big cash amounts and splitting these into small chunks. These chunks are then deposited across various accounts, which makes detection of illegal funds close to impossible.
However, financial institutions can become suspicious of this money laundering type depending on how the structuring is done. For instance, multiple cashier check deposits in a short space of time can cause them to investigate.
Using technology to ensure AML compliance can help financial institutions remain proactive and vigilant is in their battle against money laundering. If these organizations fail to do so, it could lead to serious penalties – including huge fines and a potential spell in prison.
Layering is an effective laundering method used by criminals. As the name suggests, this involves using ‘layers’ to distance the origins of the money through various forms and transactions.
The money can begin as real estate. This can then be transferred into cryptocurrency. Then turned into casino chips. The layering process not only goes through multiple transactions, but it can also be done across the globe. These points make it extremely difficult to track the laundered money.
5. Real estate laundering
Due to the large sums of cash involved, it’s understandable that real estate is a popular laundering option. This first starts by criminals purchasing real estate with ill-gotten money. They will then quickly flip the property, with the proceeds gained from the sale being deposited into a legitimate bank account. Either shell companies or a third-party might be used to complete the purchase. Due to this, along with the speed of the flip, it becomes increasingly tricky to trace where the purchasing funds originated from.