Anti-Money Laundering FAQ

What is Money Laundering

An attempt to hide the origin of the proceeds of crime with the aim of integrating them into the normal financial system, allowing criminals to profit and live from illicit funds. Simply said: it’s about concealing the criminal origin of money, to allow people to use it in the same way most of us would use hard-earned money. 

Current estimates are that roughly only 1% of all laundered money is detected. This is a Global problem and allows people to profit from organised crime, human trafficking and weapons smuggling.

How much money is laundered

The United Nations Office on Drugs and Crime (UNODC) conducted in a study that criminal proceeds amounted to 3.6 percent of the GDP (more than USD 1.6 trillion) being laundered.

How is money laundered

Most courses would break this down into the following 3 stages:

1. Placement
2. Layering
3. Integration

In simpler terms: It is moved around, split up and moved around some more until the origins of the money are well hidden and invested or placed into seemingly ‘non-suspicious’ assets (such as real-estate or companies).

Where does this take place?

This is a global problem. From Lenders and credit card companies to cryptocurrencies, factoring, fine art and jewellery, money laundering can be found in almost every industry. 

Anywhere that a change of ownership can take place, whether over a financial instrument or a good, or via charging to goods and/or services through a myriad of corporate structures money can be laundered.

How does money laundering affect businesses

Trust in the financial system and integrity in banking and financial services and a strong reputation are not just desirable (and necessary) for financial institutions but also for national governments.

Through organisations such as FATF, countries and their governments are rated on their ability and efforts to detect and deter money laundering (and thereby deter organised criminal activity). A poor rating can lead to economic sanctions have a strong effect on the national economy and foreign direct investment.