Money laundering is a crime. It is a big business. The primary purpose of organized crime is profit. It is so often said that crime does not pay, but it is not always true. The fact is that crime can pay and it does pay if the criminals are able to convert their criminally generated money into seemingly clean money.
The vast majority of criminal dealings are done in cash. Like any other business, the criminals also want to enjoy and reinvest their profit. However, profit close to the origin is risky and vulnerable to being caught, therefore the need arises to take the money as far away as possible from the source of origin where the chances of detection and prosecution remain and get the dirt of illegality removed from the money so as to look clean? seemingly clean.
It is illegal money that needs to be cleaned before it can be spent legally. Criminals need to find ways to dispose of it and have it look like a part of their wealth with as remote a chance as possible of it being traced back to the cash element. Criminals have to use the financial system and banks in particular to do this. One of the worst white-collar crimes is Money Laundering.
It is a service that allows criminals to make their crimes pay and pay well. It is the criminals? the practice of filtering ill-gotten money. Banks are the channel through which much of the dirty money enters the legitimate financial system. Estimates vary about the scale of Money Laundering activities that pass through the world's financial system, but it is estimated to be between $300 billion and $500 billion a year equivalent to about half of Britain's GPP.
IMF has estimated that about 2% - 5% of the global output is laundered annually? that most of this occurs in banks. It is estimated that more than US $1 trillion in illegal funds is circulating worldwide. These illegal funds originate from criminal activities like drug trafficking, bank fraud, etc. Individuals, as well as business organizations, can conceal and make illegitimate funds appear legitimate through a process known as money laundering.
Banks attract criminals because of the wide range of services they provide and the instruments that can be used for concealing the source of questionable funds. There has been considerable focus on anti-money laundering initiatives after the 9/11 terror attack.
As a result, many countries and international organizations have united to fight the menace of money laundering. One of the most prominent organizations set up for this purpose is Financial Action Task Force (FATF). It has made recommendations for the development of sound anti-money laundering programs.
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