By Dr. Janet L. Parker
Who would dare to say that “crime doesn’t pay.” Money laundering by organized crime operatives clearly disproves that old adage. Money laundering is the ability of drug dealers, corrupt public officials, and criminals to hide their illegal profits and make that money available to be used in the legal market. Money laundering generally involves a series of multiple transactions used to disguise the source of financial assets. This is to allow the criminals to access the money without compromising themselves. One essential aspect of money laundering is that the illegal funds are mixed with legitimate funds. So to be successful as a money launderer, one must have ability to mix the illegal money with extensive assets from the legal market. Modern financial systems, which facilitate legitimate commerce, also permit criminals to transfer millions of dollars instantly. The choice of money laundering vehicles is only limited by the criminal’s own creativity. Money can be laundered through currency exchange, stock brokers, gold dealers, casinos, insurance companies, and automobile sales. Real estate brokers who transfer real property and provide financing are an excellent vehicle for money laundering. Offshore banking, shell corporations, free trade zones, wire transfers and private banking facilities all have the ability to mask illegal activities.
The money laundering transactions typically fall into three stages:
(1) Placement, the process of placing unlawful proceeds into financial institutions through deposits, wire transfers, or other means, This transfer of illegal activities’ proceeds into financial systems is done by dividing the tainted cash into small sums and executing transactions that fall beneath regulatory reporting levels.
(2) Layering, the process of separating the proceeds of criminal activity from their origin through the use of layers of complex financial transactions. This process of generating a series of transactions, is to distance the proceeds from their illegal source and to obfuscate the audit trail.
(3) Integration, the process of using seemingly legitimate transactions to disguise the illicit proceeds. This process transforms the criminally obtained money, into funds with an apparently legal source.
While criminal organizations are adept at concealing their wealth and cash flows, their involvement in the physical trade of illicit drugs, and other dealings often exposes their revenue stream to law enforcement efforts. Terrorist groups, however, generally have fairly inexpensive operations. Their financing operations are often mixed with the group’s political and social activities making it more difficult to uncover their actions. Criminals are increasingly enlisting the services of unethical lawyers, accountants and other professionals to help them discover and manipulate new money laundering opportunities afforded globally by the Internet.
The techniques of the money launderer range from complex financial transactions, carried out through webs of wire transfers and networks of shell companies, to new inventive ways of currency smuggling. As soon as law enforcement learns how to disrupt the activity, the launderers replace the intricate scheme with yet another, more sophisticated method. Unchecked, money laundering erodes the integrity of a nation’s financial institutions. In the medical field money laundering in conjunction with medical fraud severely impacts quality of care for patients and increases costs to all medical consumers. Money laundering activities hidden within medical organizations that are connected to drug trafficking, insert a violent criminal aspect into the medical community. Money laundering activities because of their essential function are highly protected by the criminal organizations.
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