Money Laundering

Money
Launderi
Sehrish Jabeen
03

Romana Rida Farooq

Nargus 01 02

Presenter
Money Laundering

The process by which a person

conceals or disguises the identity or
the origin of illegally obtained
proceeds so that they appear to
have originated from legitimate
sources.
Money
Launderin
g
Statistics
Money Laundering Statistics
Reigons

Asia
Africa
23%
26%

Middle East
8% Europe
22%

Latin America/
Caribbean
10%
Multiregio
nal
11%
Contribution by different continents in ML(IMF report
data, year 2008)
 Credit
Cards
5% Money
Services
15%
Insurance
Companies
47%

Inverstment
Firms
25%
Banks
8%

Contribution By Financial Sector In ML (IMF Report Data, Year 2009)

Process of Money
Laundering
Process of Money Laundering
Placement Layerin
Getting Currency into the
financial system so as to
g
The movement of funds from
institution to institution to hide
convert illicit funds from cash the source and ownership of
straight into a financial the funds, obscure the audit
instrument or bank account trail and sever the link with the
original crime
Integration
The reinvestment of those
funds in an ostensibly
legitimate business so that no
suspicion of its origins remains
and to give the appearance of
legitimizing the proceeds
Steps In Any Money Laundering Process
 Why
Launder
Dirty
Money at
All?
Motives For Laundering Money
Basically there are two motives for
laundering money:
 Avoiding suspicion and
 Avoiding detection
 Avoid Prosecution

Hide Wealth Evade Taxes

Become Legitimate Increase Profits

Over $1.5 trillion of illegal funds are laundered each year
Job Of Money Launderer
A money launder's objective in laundering ill is
to : Get it out; cover it up; bring it back
Consequences
Of Money
Laundering
Economic And Social Consequences
Weakened legitimate private sector
Weakened control over economic policy
Less foreign private investment
Potential increase in crime and corruption.
Misallocation Of Funds
Unpredictable Movements Of Funds
Economic And Social Consequences
Finances Terrorism:
Money laundering provides terrorists with funds to carry
out their activities.

Undermines Rule Of Law And

Governance:
Rule of Law is a precondition for economic development -

Affects
Clear Macro
and certain rulesEconomy : all
applicable for
Money launderers put money into unproductive assets
to avoid detection
Economic And Social Consequences

Affects The Integrity Of The Financial

System :
Financial system advancing criminal purposes
undermines the function and integrity of the financial
system.
Reduces Revenue and Control :
Money laundering diminishes government tax revenue
and weakens government control over the economy.
Common
Vehicles of
Money
Laundering
Common Vehicles Of Laundering
Financial institutions
Cash intensive businesses,
Brokerage firms,
Real estate agents
Crooked LAWYERS and
ACCOUNTANTS
(Not all the 3 stages of money laundering take place in
every case)
Factors Enforcing Money Laundering
 Acceptance Of Flight Capital By Western
Countries
 Laws And Limitations Of Other Countries

 Jurisdictional Confl icts And Lack Of

International Coordination
Conti…
 Banking Role In Facilitation Of The Activity
 Bank Secrecy
 Volume And Complexity Of International
Transfers Of Funds
 Internet Based Banking
Conti…
 Shortfall Of Reporting Requirements
 Criminals Infl uencing Government And Bank
Support
 The Widespread Use And Acceptance Of
Trade Mispricing
What Do To Against
Money Laundering?
Prevention of Money Laundering
Observing Rules for
Bankers

Money
Compliance with Laundering Customer
Laws Prevention Due Diligence

Identifying
Irregular / Suspicious
Transactions
International Efforts
 Financial Acton Task Force-1989
 The Vienna Conventinon-1988
 Basle Committee Statement of Principles-
1988
 European Union Directive-1991
 IOSCO-1992
 Other