Money Laundering

Introduction

Money laundering is a process of transforming the illicit profits from criminal activities in order to hide their origins and to believe they have been obtained by legitimate means. Criminals launder profits to avoid that they be confiscated by the agencies of law enforcement, conceal their criminal activities and reinvest the funds in other illegal activities or legitimate businesses. For many years, money laundering and criminal activities have been intimately linked together (Leff, 2012). Financial institutions are invariably used by launderers in an effort to "clean up" money obtained in illicit activities. Until the 1970 there was no law that specifically sought to curb money laundering. The Money Laundering Control Act of 2006 is the most significant piece of legislation enacted to combat money laundering because it directly affects financial institutions.

Discussion

With the increase in globalization, relationships and growing economic interdependence among countries has resulted in increased opportunities and new mechanisms to launder money and legitimize all kinds of funds of illegal origin. Money laundering facilitates corruption and destabilizes the economies to make it vulnerable. Moreover, it undermines the integrity of institutions and legitimate financial systems. It gives rise to organized crime with the help of funds necessary to undertake other criminal activities (Leff, 2012). This is a global problem involving many specialized techniques. Technical advances in the field of electronic commerce, global diversification of financial markets and new financial products provide further opportunities to launder the proceeds of criminal activities and to conceal the money trail from these activities.

Techniques

There are many ways through which countries have sought to firmly combat the middle of money laundering. The creation of various organizations to fight these bad financial practices, such as Gafisud, have resulted in great progress for nations to come together and put a firm hand against money laundering and tax offenses (Vlcek, 2011). In addition to the ...