{"id":8813,"date":"2017-08-14T13:25:19","date_gmt":"2017-08-14T13:25:19","guid":{"rendered":"https:\/\/indiaforensic.com\/certifications\/?p=8813"},"modified":"2019-06-01T13:42:00","modified_gmt":"2019-06-01T13:42:00","slug":"conceptual-development-of-money-laundering","status":"publish","type":"post","link":"https:\/\/indiaforensic.com\/certifications\/conceptual-development-of-money-laundering\/","title":{"rendered":"Conceptual Development of Money Laundering"},"content":{"rendered":"

Introduction <\/strong><\/p>\n

Money laundering is an inevitable extension of organized crime and an essential aspect of any profit \u2013generating criminal activity. Broadly stated the term money-laundering means any process or activity connected with the conversion of proceeds of crime to project proceeds of crime as untainted property. Money laundering can also be explained as a process which transforms illegal inputs into supposedly legitimate outputs. In this chapter researcher is focusing on various methods of money laundering and law money is being laundered.<\/p>\n

Origin of Money Laundering:<\/strong><\/p>\n

More than 3000 years ago, merchants of China hid their assets and profits of trade, fearing forfeiture of the same from the Rulers The traders did so by converting their profits into readily movable assets, moved cash to outside jurisdictions, and did trade at inflated price to expatriate funds.[1]<\/a> The logic behind chasing money trail is that the drug sales mostly in cash has to be converted into utilizable financials resources appearing to have legitimate origin.[2]<\/a> Money laundering is an inherent characteristic of organized crime, because without money laundering there would be no organized crime.[3]<\/a> Money Laundering is as old as old as money itself, though prior to 1970s none looked it as a crime as such. It is reported that during the period of Prohibition in U.S.A, especially during 1920-1933, huge sums of money were laundered. Incidentally Al Capone the notorious gangster of USA who was indicted for first time in 1931 on a Prohibition charge (transportation of beverages with more than 0.5% alcohol content) rather than numerous crimes committed by him and his gang. It was a time when law enforcement (US Attorney) came closer to indicting one for the first time in money laundering offence. It was a time when police forces with guns endlessly chased these criminal gangs without success, the people behind desks without guns who were successful in getting the gangsters indicated and charged.[4]<\/a> The period of 1980s were often called as decennium of \u2018total greed\u2019, and 1990s the decennium of \u2018clearing up\u2019, while the new millennium has really emerged cleaning up financial world.[5]<\/a> Clean money is worthy than dirty money, as untainted money can be invested in profitable and legitimate activities, conspicuously without risk of recrimination.[6]<\/a> If drug dealers even think of retaining property value whether or not related to crime, they would be unable to justify it by declaring officially earned income, more so in civil forfeiture regimes.[7]<\/a> It is may be extremely difficult to find out the origin of illicit money which is legally not accounted for, as in most instances it is camouflaged in propagating and nurturing global criminal activities.[8]<\/a><\/p>\n

The concept of criminal finance is much broader as it centers on profiting from or financing criminal activity.[9]<\/a> Far from a byzantine mystery, criminal laundering is an open secret.[10]<\/a> The most important aspect of money laundering is disguising the link between the money and its (illegal) source.[11]<\/a> The proceeds of drug trafficking cannot be accounted for normally like legitimate other legitimate business, and, therefore, need to be disguised.[12]<\/a> Most criminal and terrorist organizations use laundering to funnel funds into legitimate businesses through illegal enterprises. These businesses act as a smokescreen to conceal the identity as well as destination of the money.[13]<\/a> Money per se has to be laundered for two reasons. Firstly the money trail itself can become evidence against the perpetrators of offence and secondly illicit money with criminals can be the target of investigation and action.[14]<\/a> The sophisticated money launderer is like water running down hill; both seek out the line of least resistance.[15]<\/a> Money laundering is as old as money generating crime itself. Successful criminals from age immemorial always have to find out a way to make their proceeds from crime look like legally obtained money.[16]<\/a><\/p>\n

A vast majority of illegal acts are perpetrated to achieve one common goal – money. If money is generated by crime, it is useless until the tainted source of funds can be disguised or preferably obliterated.[17]<\/a> Crime can be successful only if the funds generated can be utilized without their true source being known. Laundering expands criminal activity because the washed funds are at times again reinvested in the businesses.[18]<\/a> \u201cThe three elements- conversion, concealment and false legitimacy \u2013 form the quintessence of money laundering<\/em>\u201d.[19]<\/a> Money laundering, by definition, relates to acquisitive crimes, to say, the offences which produce a financial benefit.[20]<\/a> \u201cCleanliness is next to Godliness\u201d is what the old adage, but laundering dirty money by cleansing it has rather the opposite tendency.<\/p>\n

Meaning of money laundering<\/strong><\/p>\n

The term \u2018money laundering\u2019 arose in the US in 1920s, when it was apparently used by the American police officers with reference to ownership and use of launderettes by mafia who were able to declare their illicit proceeds as profits gained through launderettes, and hence the term \u2018laundering\u2019 was first coined. The term was apparently first used with a legal meaning in an American judgment in 1982 concerning the confiscation of laundered Columbian drug proceeds[21]<\/a> (US Vs $ 4,255,625.39, Federal supplement Vol.551, South District of Florida (1982) 314). The widespread acceptance of this unofficial popular meaning often leads the public to assume that \u2018money laundering\u2019 has an official, juridical, definition, which is rarely the case. The term is a used as a shorthand phrase to define a complex process.[22]<\/a><\/p>\n

Money laundering is an inevitable extension of organized crime and an essential aspect of any profit \u2013generating criminal activity.[23]<\/a> Broadly stated the term money-laundering means any process or activity connected with the conversion of proceeds of crime to project proceeds of crime as untainted property.[24]<\/a> Money laundering can also be explained as a process which transforms illegal inputs into supposedly legitimate outputs. Illicit proceeds gained by criminals are made to look as if they were the fruits of honest hard labor\u2014transformed, for instance, into legitimate-looking bank accounts, real estate, or luxury goods. This process allows criminals to prosper from their crimes and allow them to lead normal life with others without looking like criminals.[25]<\/a> Laundering is usually defined to take into account any dealing with property that is produced by crime, but an important point is that the money is dealt with in such a way, so as to present it as having been acquired otherwise than by crime.[26]<\/a> The term laundering offences is so wide now that almost any financial transaction is capable of being laundering, if some of the money or other property in fact has its provenance in crime.[27]<\/a> Originally, money laundering referred only to the laundering of drug money despite the fact that criminal codes differ in various countries, it is important to arrive at a common definition of money laundering. A clear definition that includes the types of crime is necessary for measuring money laundering.[28]<\/a><\/p>\n

The Vienna Convention did not use the term \u2018money laundering\u2019 nor does it scope travel beyond drug relate offences. At that time some UN member states were reluctant to accept use of term which was then a colloquial one, in an international Convention.[29]<\/a> The UN Convention against Transnational Organized Crime, which entered into force on 29 September 2003, widens the definition of money laundering to include the proceeds of all serious crime, and gives legal force to a number of issues addressed in the 1998 United Nations General Assembly Special Session\u2019s (UNGASS) Political Declaration.[30]<\/a><\/p>\n

Definition of Money Laundering<\/a><\/strong><\/p>\n

Legitimization of illegally obtained money to hide its true nature or source (typically the drug trade or terrorist activities). Money laundering is effected by passing it surreptitiously through legitimate business channels by means of bank deposits, investments, or transfers from one place (or person) to another.[31]<\/a> The \u200bcrime of \u200bmoving \u200bmoney that has been \u200bobtained \u200billegally through \u200bbanks and other \u200bbusinesses to make it \u200bseem as if the \u200bmoney has been \u200bobtained \u200blegally.[32]<\/a><\/p>\n