What Is Money Laundering and How Do Criminals Conceal Illicit Funds with Real-Life Examples?
What is Money Laundering?
Today we shall be explaining the meaning of the phrase “money laundering” which you must have heard often in the news, yet many people do not know what it really means or how it works. Simply put, the procedure of mystifying the source of funds that have been gained unlawfully and later putting them through a complex sequence of banking transfers or business dealings in order to make it look legal in its nature is considered as an act of money laundering.
If we talk about the real essence of money laundering, it is just all about thrashing the proceeds of illegal activities in order to make them seem legal.
Real Life Money Laundering Examples
Comprehending the actual incidents of money laundering is definitely going to make it easier to understand the concept of money laundering with depth. List of following six noteworthy money laundering real life case studies will help in demonstrating the variety of methods that thieves usually adopt.
1. The scandal involving the Panama Papers
Racket which was spreaded all over the world in which offshore accounts and shell corporations were aiding for money laundering and later was made public by the Panama Papers. Prominent people were implicated in the Panama Papers that specifically included entities like politicians and celebrities. This whole strategy was done in order to tuck away the ownership of funds and hence conceal the proceeds of fraud with tax evasion, and other illegal acts.
To make it more easier to understand, the layering process comprising intricate offshore transactions was particularly utilized to make it look more difficult to track the source of the funds in the first place.
2. The Scandal at Danske Bank
One of the biggest money laundering scandals in history was related to the Danske Bank that particularly involved transaction monitoring of suspicious nature that were totaling more than $230 billion which caused a great loss to the overall financial environment of that particular jurisdiction. The Estonian branch of the bank managed to serve as a conduit for money that was originally coming from Russia and other jurisdictions as well.
Scammers managed to move money with the help of multiple accounts while hiding its illegal origins by working with people who were working inside and creating fake documentation.
3. The Bank of Credit and Commerce International (BCCI)
BCCI is one of the famous banks that kept doing the act of money laundering throughout the period from 1980s to 1990s by participating in several related scams. Opportunities of this nature made it easier for corrupt politicians, terrorist groups, and drug cartels to launder their money without too much effort. After getting caught, administration of the bank deliberately hid transactions which made it a hub for international money laundering.
Cases of such nature help in demonstrating the concept of corruption that originates from the careless behavior of the institutions themselves which may turn them into instruments for money laundering.
4. The Market for Art and Antiquities
Using the art industry to launder money is quite a clever tactic where scammers can easily buy expensive artwork with illegal money and later sell them at an auction or to private collectors. Trail of the illegal funds is originally made to show it is more difficult to follow by the opaqueness of art transactions.
5. Transactions in Real Estate
One common channel for which scammers tend to use is the world of real estate where criminals frequently use shell corporations to purchase real estate using their illegal finances in order to make money look clean after the homes are sold.
In one instance, money originally linked to a cocaine gang in South America that was used to buy an opulent condo in New York City and the value of property dramatically by yielding a profit that appeared to be genuine.
6. Laundering of Cryptocurrencies
New channels in the world of technology have made money laundering much easier as cryptocurrency is the top example of this scenario. Criminals can surreptitiously transfer money across borders by using digital currencies in order to tuck away the trail by buying cryptocurrencies with illegal money. Moving cryptocurrency across multiple wallets and then converting them back to fiat money gives an impression of legal money.
In one prominent instance, there was a hacker who collectively used Bitcoin to transfer millions of dollars through the route of cryptocurrency exchanges and then later turned them back into actual cash in order to launder the proceeds of ransomware attacks.
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