How is money laundering done?

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It is common for the media to regularly deal with issues such as money laundering. These types of operations can involve criminal organizations, companies and large banks. All this in order to give a legal appearance to money that has been obtained illegitimately.

Unfortunately, drug traffickers, terrorist organizations and other types of criminal structures resort to money laundering to make their money legal.

Everything will start with obtaining black money from an illegal operation. These operations include criminal acts such as drug trafficking, prostitution, arms sales or smuggling. Therefore, those who carry out these criminal operations will not declare the money earned to the Treasury.

Now, not all black money necessarily has to come from crime. And it is that, all money not declared to the Treasury will be considered black money. Although it is true, everything is said, that the existence of black money can raise suspicions about the activities carried out by a person. Many times, black money is the first trace of some type of illegal activity and, in many cases, the great indication of a tax crime.

Stages of money laundering

In the money laundering process, through which an attempt will be made to give a legal origin to the funds obtained in an illicit way, three phases are worth highlighting:

  • Placement: Money obtained from illegal activities is entered, usually in cash.
  • Concealment: To prevent the authorities from discovering the origin of the money, a series of complicated transfers will be carried out that make it difficult to trace the funds.
  • Integration: Once the origin of the money has been hidden, it will end up being integrated into the financial system. To do this, it will appear that the money comes from totally legal economic activities.

How is money laundering done?

Now, what are the techniques that fraudsters use to give a semblance of legality to their black money? Well, the procedures used for money laundering or money laundering are very diverse.

Money laundering through banks

As a first option we will explain what division or fractionation consists of, also known colloquially as “smurfing”. To do this, it is enough to divide large sums of money into smaller amounts, creating different accounts in which these amounts will be deposited.

In this way, the money will go unnoticed by the Treasury, since financial entities are not required to report these movements of small sums of money.

A second alternative is to have the collaboration of a bank. Experience has shown that many banks have cooperated in money laundering. There have been cases in which the bank was aware of these operations and other situations in which the bank was unaware of the origin of the money.

Societies come into play

A very common practice among fraudsters is to resort to so-called intervening companies. To do this, the fraudster will create a complex network of companies that carry out operations between them. It will be necessary for these companies to carry out numerous transactions, thereby making it difficult to trace money. Meanwhile, the different companies, with each operation, will issue false invoices.

Continuing with laundering operations that involve the creation of companies, we find the loans. To do this, it is enough to create a company abroad with black money. Then it will be enough to make a loan to yourself. The amount of the loan may be transferred to a legal company or to a natural person that is located in national territory.

Briefcases

If you want to avoid the transit of money in national territory, there is the possibility of resorting to the classic briefcases. This consists of leaving national territory making several trips abroad with sums of money that do not attract the attention of the authorities, to later open an account abroad.

Another option is to leave the country directly with large sums of money, although in this case, the risk is greater.

Money laundering through high-value goods

It is quite common for those who launder money to go to the real estate market. To do this, a property is purchased for a price higher than the market price. Thus, the purchase price will be included in the deed of sale. Next, the corresponding taxes will be paid for the transfer of the property, and, with this, the funds will have been laundered.

If we continue with high-value goods, it is worth highlighting the art auctions. In this operation, the launderer will need the collaboration of an accomplice, who will be given a certain sum of money. Thus, the accomplice will offer a high amount for the auctioned works. The accomplice will then deliver the work to the bleacher. For his participation in the operation, the accomplice will receive a commission.

In this way, the launderer will keep the amount of money, which will be totally legal. This method is especially attractive for whitewashers, because unlike the purchase of real estate, where there are a series of records, in art auctions, there is a great opacity.

Casinos and gambling to launder money

A particularly simple method is to go to a casino. Whoever owns black money will exchange the cash for casino chips. To avoid attracting attention, you will play, losing some money. However, with most of the money safe, you will ask to have your chips exchanged, so the casino will issue you a check. In the event that the large sum of money arouses the suspicions of the Treasury, the launderer can always make the excuse that he had the fortune to win a succulent prize.

Finally, and in line with gambling, there is the possibility of buying winning lottery tickets. Thus, the launderer contacts the lottery winner, offering him the full amount of the prize and an additional commission. Therefore, the bleach will have become a fair lottery winner. Now, whoever sells the winning lottery ticket will have to face a new problem, since it will be the one who must think about how to launder the money obtained from the sale of the winning ticket.

Tags:  accounting opinion derivatives 

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