Lisa Idzikowski - Money Laundering

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Published in 2021 by Greenhaven Publishing, LLC

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Copyright 2021 by Greenhaven Publishing, LLC

First Edition

All rights reserved. No part of this book may be reproduced in any form without permission in writing from the publisher, except by a reviewer.

Articles in Greenhaven Publishing anthologies are often edited for length to meet page requirements. In addition, original titles of these works are changed to clearly present the main thesis and to explicitly indicate the authors opinion. Every effort is made to ensure that Greenhaven Publishing accurately reflects the original intent of the authors. Every effort has been made to trace the owners of the copyrighted material.

Cover image: Africa Studio/Shutterstock.com

Library of Congress Cataloging-in-Publication Data

Names: Idzikowski, Lisa, editor.

Title: Money laundering / Lisa Idzikowski, book editor.

Description: New York: Greenhaven Publishing, 2021. | Series: At issue | Includes bibliographical references and index. | Audience: Grades 912.

Identifiers: LCCN 2020005621 | ISBN 9781534507333 (library binding) | ISBN 9781534507326 (paperback)

Subjects: LCSH: Money launderingJuvenile literature. | MoneyLaw and legislationJuvenile literature.

Classification: LCC HV8079.M64 M66 2020 | DDC 364.16/8dc23

LC record available at https://lccn.loc.gov/2020005621

Manufactured in the United States of America

Website: http://greenhavenpublishing.com

Contents

International Compliance Association

Luke Harding

Ken Maginnis

Ashenafi Endale

Shima Baradaran Baughman

Takero Minami

Jamie Redman

Bruce Zagaris and Scott Ehlers

David Sheldon

Nir Kshetri

Alexon Bell

European Commission

Nigel Gould-Davies

Internal Revenue Service

Andrea Durkin

Clay Lowery and Vijaya Ramachandran

Ronald F Pol

Sean Curley

Introduction

M any people are familiar with certain types of crimearmed robbery, human trafficking, drug smuggling, assault, terrorist bombings, and more. But what about money laundering? It falls under a broader category of crime known as white-collar crime. A simplified definition from Merriam-Webster states that an individual has to transfer (illegally obtained money or investments) through an outside party to conceal the true source. According to the United States Department of the Treasury:

money laundering generally refers to financial transactions in which criminals, including terrorist organizations, attempt to disguise the proceeds, sources or nature of their illicit activities. Money laundering facilitates a broad range of serious underlying criminal offenses and ultimately threatens the integrity of the financial system.

According to statistics from the FBI, violent crime in the US fell by 51 percent between 1993 and 2018. Money laundering may not be classified as a violent crime and may not be commonly recognized by many people, but it is an issue that has important consequences on international and domestic politics, the economy, and society as a whole.

Money laundering occurs around the world. The United Nations Office on Drugs and Crime estimates that as much as two trillion dollars are laundered annually,

So how and why does money laundering take place? Simply put, money laundering is used by criminals. They need to somehow take illegally obtained money and transform it into seemingly legal tender so that they can spend it without raising suspicion. A well-known money laundering operation that took place from 2010 until 2014 called The Laundromat reportedly laundered $20 billion to $80 billion worth of dirty or illegal money. This scheme involved multiple Russian banks and businesses, and the dirty money was filtered through fake companiesknown as shell companiesin over ninety countries worldwide, including the US, UK, China, France, and Germany. Smaller countries like Taiwan and Slovenia also received funds. All in all, it was estimated that over $700 million went to the UK and over $60 million ended up in the US. A wide variety of goods and services were paid for using these illegal funds, including furs and diamonds, home cinema equipment, high priced private schools, aesthetic dentistry, expensive watches, and other items.

Not all money laundering is done in exactly the same manner, but according to the US Crimes and Financial Network, which is a bureau of the US Department of the Treasury, there is a general pattern to how it plays out:

Typically, it involves three steps: placement, layering and integration. First, the illegitimate funds are furtively introduced into the legitimate financial system. Then, the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally, it is integrated into the financial system through additional transactions until the dirty

Interestingly, advanced technologies often play an important role in money laundering schemes. Some make it easier for criminals to complete their illegal activities. Imagine you have $1 million in cash. That much money weighs about one hundred pounds, and specially trained detection dogs can notice its scent within seconds. Do you have dreams of owning fancy cars, big diamonds, designer clothes, or a big apartment? What if someone were to waltz into a car dealership or jewelry store and try to pay for something in cash amounting to $10,000 or more? According to the US Internal Revenue Service, any business or bank must report large cash transactions by filing a government form. This is aimed at preventing money laundering.

Money launderers have found other ways to circumvent this issue through the use of technology. They have turned to alternate forms of payment such as stored-value cardswhich are similar to gift cardsor cryptocurrencies. Law enforcement agencies know that criminals are using stored-value cards, but unlike the $10,000 rule there is no regulation concerning these cards. Cryptocurrencies such as Bitcoin are becoming the method of choice for money scammers. It is interesting to note that according to the Pew Research Center, about half of all Americans surveyed in 2016 had heard of Bitcointhe original and most widely used cryptocurrency as of 2018but relatively few actually used it. Just 1 percent of Americans had ever used, collected, or traded in Bitcoin.

Experts in law enforcement, financial systems, and many other avenues of society know that money laundering involving cryptocurrencies is increasingly being used to support various illegal activities. Can anything be done to prevent it? Countries and governments around the world are attempting to make money laundering of any sort much more challenging. They also are trying to help businesses and financial entities more easily detect illegal activity. There is no doubt that leaders around the world recognize the hazards and negative consequences that money laundering poses, and they are putting great efforts into stemming this criminal enterprise. Whether or not the current and proposed strategies will work is another question. As has been demonstrated throughout history, criminals and criminal networks put great effort into staying ahead of the law and use almost any possible means to do so.