Which of the following Is the Best Definition of Money Laundering

Money laundering is the conversion or transfer of property; conceal or conceal the nature of the product; acquiring, possessing or using property knowing that it is derived from criminal activity; or participate in or support the movement of funds to make the product look legitimate. Money launderers are constantly looking for new ways to launder their funds. Economies with growing or developing financial centres but inadequate controls are particularly vulnerable as established countries implement comprehensive anti-money laundering regulations. The practice of money-laundering and other economic and financial crimes is seeping into the economic and political structures of most developing countries, leading to political instability and economic digressions. There are also national money laundering laws and regulations in each country. Most countries have also appointed committees to monitor and regulate money laundering, terrorist financing and other financial crimes. Money laundering is a threat to the proper functioning of a financial system; However, it can also be the Achilles` heel of criminal activity. At this point, illegal “dirty” money is “laundered” through a network of complicated transactions: false accounting, multiple transactions, overlapping transactions or any other technique. While banks operating in the same country generally have to follow the same anti-money laundering laws and regulations, financial institutions structure their anti-money laundering efforts somewhat differently.

[49] Today, most financial institutions worldwide and many non-financial institutions are required to identify suspicious transactions and report them to the FIU of the country concerned. For example, a bank should verify a customer`s identity and, if necessary, monitor transactions for suspicious activity. This process falls under “know the customer” measures, which means knowing the identity of the customer and understanding the types of transactions the customer is likely to make. By knowing their own customers, financial institutions can often detect unusual or suspicious behavior called anomalies, which can be an indication of money laundering. [50] Money laundering has been addressed in Article 3.1 of the 1988 Vienna Convention, which describes money laundering as follows: Since money laundering is a consequence of almost all lucrative crimes, it can occur virtually anywhere in the world. In general, money launderers tend to look for countries or sectors where there is a low risk of detection due to weak or ineffective anti-money laundering programs. Since the objective of money-laundering is to return illicit funds to the person who generated them, money launderers generally prefer to transfer funds through stable financial systems. Many jurisdictions have sophisticated financial and other monitoring systems in place to enable law enforcement agencies to detect suspicious transactions or activities, and many have entered into international cooperation agreements to assist each other in these efforts.

The United Nations Office on Drugs and Crime (UNODC) estimates that the amount of money laundered worldwide in one year is “2 to 5% of global GDP, or $800 trillion to $2 trillion in current US dollars”. [2] Created in 1989 by the G7 countries, the Financial Action Task Force on Money Laundering (FATF) is an intergovernmental body responsible for developing and promoting an international response to the fight against money laundering. The FATF Secretariat is located at the OECD headquarters in Paris. In October 2001, the FATF expanded its mandate to include combating the financing of terrorism. The FATF is a policy body that brings together legal, financial and law enforcement experts to carry out national legislative and regulatory reforms on AML and terrorist financing. In 2014, its members consisted of 36 countries and territories and two regional organizations. The FATF cooperates with a number of international agencies and organizations. [62] These bodies have observer status with the FATF, which does not give them voting rights but allows them to participate fully in plenary sessions and working groups. [63] In addition to the economic costs of implementing anti-money laundering laws, excessive attention to data protection practices can result in disproportionate costs to individuals` privacy rights.

In June 2011, the EU Advisory Board on Data Protection published a report on data protection issues related to the prevention of money laundering and terrorist financing, which identified numerous breaches of the existing legal framework for privacy and data protection. [58] The report makes recommendations on how to combat money laundering and terrorist financing while respecting privacy rights and data protection laws. [59] In the United States, groups such as the American Civil Liberties Union have expressed concern that money laundering regulations require banks to report on their own customers, essentially making private companies “agents of the state of surveillance.” [60] In reality, money laundering cases may not have all three phases, some phases may be combined, or several phases may be repeated several times.