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Bank Fraud and Money Laundrering
- Money laundering is the illegal process of making "dirty" money appear legitimate instead of ill-gotten.
- Criminals use a wide variety of money-laundering techniques to make illegally obtained funds appear clean.
- Online banking and cryptocurrencies have made it easier for criminals to transfer and withdraw money without detection.
- The prevention of money laundering has become an international effort and now includes terrorist funding among its targets.
- The financial industry also has its own set of strict anti-money laundering (AML) measures in place.
- Illegal and dangerous activities, such as drug trafficking, people smuggling, terrorism funding, smuggling, extortion, and fraud, endanger millions of people globally and impose tremendous social and economic costs upon society. As the proceeds of such activities are legitimized by money laundering, combating money laundering may result in a reduction in criminal activity and hence a significant benefit to society.
What Is an Example of Money Laundering?
- Say that cash has been earned illegally from selling drugs, and the drug dealer wishes to buy a new car with the proceeds. Because it is difficult and suspicious to try to purchase a vehicle entirely in cash, the dealer needs to launder the money to have it appear legitimate. The drug dealer also owns a small laundromat, a highly cash-intensive business. The cash from the drug deal is mingled with the laundromat's cash and then taken to a bank for deposit. Then, drawing a check from the laundromat's account, the dealer is able to buy the car without suspicion.
- Another common form of money laundering in casinos is to buy chips from the casino with cash, and to receive checks in return for the chips from the casino, often without gambling at all or placing minimal bets.
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