What do you understand by Money Laundering

What do you understand by Money Laundering?

The fundamental concept of money laundering is the process by which proceeds from a criminal activity are disguised to conceal their illicit origins. Money Laundering is defined in Section 2 (v) of the Money Laundering Prevention Act 2012 as follows:

“Money laundering” means –

(i) Knowingly moving, converting, or transferring proceeds of crime or property involved in an offence for the following purposes:-

                  1. concealing or disguising the illicit nature, source, location, ownership or control of the proceeds of crime; or

                  2. assisting any person involved in the commission of the predicate offence to evade the legal consequences of such offence;

(ii) Smuggling money or property earned through legal or illegal means to a foreign country;

(iii) knowingly transferring or remitting the proceeds of crime to a foreign country or remitting or bringing them into Bangladesh from a foreign country with the intention of hiding or disguising its illegal source; or

(iv)Concluding or attempting to conclude financial transactions in such a manner so as to reporting requirement under this Act may be avoided;

(v) Converting or moving or transferring property with the intention to instigate or assist for committing a predicate offence;

(vi) Acquiring, possessing or using any property, knowing that such property is the proceeds of a predicate offence;

(vii) Performing such activities so as to the illegal source of the proceeds of crime may be concealed or disguised;

(viii) Participating in, associating with, conspiring, attempting, abetting, instigate or counsel to commit any offences mentioned above;

Dishonest people and criminals launder their money to avoid legal actions against them when they make property with the illegal money they had obtained or stolen through unfair means. Countries of the whole world have taken various measures to stop money laundering, especially after the terrorist attack in New York on September 11, 2001. In Bangladesh the Money Laundering Prevention Act-2002 came into force on April 5, 2002 with the aim to prevent money laundering. Bankers are instructed to watch over any suspicious transaction by any client. A banker must report to the central bank through proper authority if he detects any unusual transactions in his bank. It is assumed that due to preventive measures taken by all government against money laundering remittance to Bangladesh through banking channels has increased manifold. Strict monitoring over money laundering will also reduce the propensity of dishonest people in hoarding stolen money or taking bribes.

Money Laundering Prevention Act, 2002 defines money laundering as properties acquired or earned directly or indirectly through illegal means; illegal transfer, conversion and concealment of location of the properties earned through legal or illegal means or assistance in the said acts.

There are three main stages of money laundering. These are:

1.                  Placement: The physical disposal of the initial proceeds derived from illegal activity e.g. depositing the money earned by theft, robbery, bribery or hijacking to a bank account.

2.                  Layering: Separating illicit proceeds from their sources by creating complicated layers of financial transactions designed to disguise the audit trail and provide anonymity e.g. electronic transfer of the fund to a fake firm, issuing overseas bank draft, purchasing travelers cheques, transfer of fund from one bank account to various names of different bank branches.

3.                  Integration: It means the provision of apparent legitimacy to property gained in an unlawful way. If the layering process is complete, integration process place the laundered proceeds back into the economy in such a way that they re-enter the financial system appearing as normal business fund e.g. sale of flat/house/land purchased by illegal income.

Reasons:

a) Criminals conduct their operations for financial gains. They have to bear expenditures like operating expenses, purchasing services of the corrupt officials etc,

b) Criminals hide the sources of their wealth and they always try to disguise the ownership or control of the wealth, and

c) Criminals conceal the proceeds from investigation or seizure.