CARTONS of cash in the Kabul airport, a strategically placed teller’s window just before immigration in Antigua, and some lines of code in accounting software in a bank in the Dominican Republic—seemingly unrelated phenomena, but all part of the global problem of money laundering. And all are linked to financial sector failures that led to real economic hardship for law-abiding citizens in the countries involved.
Money laundering is the process that transforms illegal inputs into supposedly legitimate outputs. Proceeds gained by crimes such as fraud, theft, and drug trafficking are made to look as if they were the fruits of honest hard labor—transformed, for instance, into legitimate-looking bank accounts, real estate, or luxury goods. This allows criminals to prosper from their crimes and live their lives without looking like criminals. Moreover, they can use these laundered proceeds to expand their criminal enterprises, thereby increasing their wealth and power, including the power to corrupt and buy protection from the political and law enforcement establishment.
If there were no fraud, no tax crime, no insider trading, no drug trafficking, no corruption, or indeed no proceeds-generating crime at all, there would be no money laundering. The close relationship between the criminal act that gives rise to proceeds and the laundering of these proceeds makes it very difficult to separate the act of money laundering from the underlying crime, although the two are treated legally as separate acts. Money laundering is an essential component of any profit-making crime, because without the laundering, crime really doesn’t “pay.”
When the underlying—or “predicate”—crime is something like drug trafficking, everyone understands the social costs, which are huge and visible. But the social and economic costs of white-collar crimes like embezzlement, tax evasion, insider trading, and bank fraud, while less obvious, can be massive as well.
Detailed report link: click here