by Zenobia Sethna.
Money Laundering is the act or attempted act to conceal or mask the identity of illegally obtained money or funds so that they appear to have originated from legitimate (legal) sources. Illegally obtained funds are ‘laundered’ and relocated around the world using and abusing ‘shell companies’, ‘intermediaries’ and ‘money transmitters’. In this way, the illegal funds remain concealed and are assimilated into legal business and into the legal economy.
Money Laundering is not a single act but is in fact a process. There are usually three steps involved in the process of laundering money:
- Placement: The act of introducing ‘dirty money’ (i.e. money obtained through illegitimate, criminal means) into the financial system in some way. This is the first step of the money-laundering process and the aim of this phase is to transfer the cash from the location of acquisition, so as to not get detected by the authorities. This is done by injecting criminal money into the legal financial system by opening up a bank account in the name of unknown individuals or organizations and depositing the money in that account.
- Layering: Layering is the act of hiding the source of that money by way of a series of complex transactions.”Layering” refers to separating banned proceeds from their source by wilfully creating intricate layers of financial transactions. Layering hides the audit trail and provides anonymity. This is achieved by moving money to offshore bank accounts in the name of shell companies, buying high value commodities like diamonds and transferring the same to different jurisdictions.
- Integration: The act of acquiring that money in apparently legitimate means. “Integration” refers to the reinjection of the laundered money back into the economy in such a way that they re-enter the financial system as “normal” business funds. The launderers normally accomplish this by setting up unknown institutions in nations where secrecy is guaranteed. New forms of business give a stage for integration exercise. Now a person can launch a business with just a webpage and transform his illegal money to legal by showing profits from the webpage. There are other ways like capital market investments, real estate acquisition, the catering industry, the gold market, and the diamond market.
Imarticus recently concluded its very first executive development program on Anti money laundering on 28th and 29th July at Novotel Hotel, Bangalore. The 2-day workshop was conducted by AML/KYC experts Ratan Postwalla and Sayak Bhanja. The workshop saw active participation from functional executives and managers from Societe General and Viteos. The program was really well received and saw a great deal of engagement from the 10 participants. We garnered a 4+ rating from participants on both trainers and content, with 80% of participants willing to recommend our workshop go their friends and colleagues.