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Money Laundering - PowerPoint PPT Presentation

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Money Laundering. The process of creating the appearance that large amounts of money obtained from serious crimes, such as drug trafficking or terrorist activity, originated from a legitimate source.

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Money Laundering

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    1. Money Laundering • The process of creating the appearance that large amounts of money obtained from serious crimes, such as drug trafficking or terrorist activity, originated from a legitimate source.

    2. the metaphorical "cleaning of money" with regard to appearances in law, is the practice of engaging in specific financial transactions in order to conceal the identity, source and/or destination of money and is a main operation of underground money.

    3. In the past, the term "money laundering" was applied only to financial transactions related to organized crime. Today its definition is often expanded by government regulators (such as the United State Office of the comptrollerof the Currency) to encompass any financial transaction which generates an asset or a value as the result of an illegal act, which may involve actions such as tax evasion or false accounting. As a result, the illegal activity of money laundering is now recognized as potentially practiced by individuals, small and large businesses, corrupt officials, members of organized crime (such as drug dealers or the Mafia) or of cults, and even corrupt states or intelligence agency, through a complex network of shell companies based in offshore tax havens.

    4. The increasing complexity of financial crime, the increasing recognised value of so-called financial intelligence in combating transnational crime and terrorism, and the speculated impact of capital extracted from the legitimate economy has led to an increased prominence of money laundering in political, economic and legal debate. In many jurisdictions, money laundering is seen as an "activity based" offense.

    5. Modern development The act of "money laundering" was not invented until the Prohibition era in the United States, but many techniques were developed and refined then. Many methods were devised to disguise the origins of money generated by the sale of then-illegal evasion beverage Following AL capone’s 1931 conviction for tax evasion, mobster Meyer Lansky transferred funds from Florida "carpet joints" (small casinos) to accounts overseas. After the 1934 Swiss Banking Act which created the principle of bank secrery, Meyer Lansky bought a Swiss bank where he would transfer his illegal funds through a complex system of shell companies, holding companies and offshore accounts. HISTORY

    6. The term of "money laundering" itself does not derive, as is often said, from the story that Al Capone used laundromats to hide ill-gotten gains. It was Meyer Lansky who perfected money laundering's older brother, “capital fight", transferring his funds to Switzerland and other offshore places. The first reference to the term "money laundering" itself actually appears during the Watergate scandal. US President Rchard Nixon "committee toRe-elect the President" moved illegal campaign contributions to Mexico, then brought the money back through a company in Miami. It was Britain's guardian [newspaper that coined the term, referring to the process as "laundering."

    7. International initiatives against money laundering The 1980s witnessed the international trend for the criminalization of money laundering as a discrete crime. The US and the UK have done so in 1986, and the 1988 Vienna Convention has required State Parties to introduce this crime in their domestic legal systems. In 1989, the FATF was created. Its first report, issued in 1990, recommended the criminalization of money laundering. In 1991, the European Union required its Member States to 'prohibit' the laundering of funds derived from drug offences; the original Directive was revised in 2001 and replaced by another in 2005.

    8. PROCESS • Money laundering is often described as occurring in three stages: placement, layering, and integration. • 1 Placement: refers to the initial point of entry for funds derived from criminal activities. • 2 Layering: refers to the creation of complex networks of transactions which attempt to obscure the link between the initial entry point and the end of the laundering cycle. • 3 Integration: refers to the return of funds to the legitimate economy for later extraction.

    9. Anti-money laundry in China • China still facing tough situation in anti-money laundrying: official • China to expand anti-money laundering inspection to securities, insurance institutions

    10. China still facing tough situation in anti-money laundrying: official •      China is still facing a tough situation in anti-money laundering, said You Quan, deputy secretary-general of China's State Council.        He called on relevant departments to establish an coordinated system and speed up building of a corresponding legal system with Anti-money laundering Law as the core.        You Quan made the remarks while attending a conference on anti-money laundering in Beijing on Friday, which was chaired by Xiang Junbo, vice governor of the People's Bank of China (PBOC) .        There is still a room to improve for China's anti-money laundering efforts compared with international standard and the requirement of building a perfect market-oriented economic system, You said.

    11.         Participants of the conference included representatives from 23 departments such as the State Council, the Ministries of Foreign Affairs, Public Security and Finance as well as the State Foreign Exchange Administration.        A report on China's anti-money laundering effort in 2004, published by China's central bank on July 12, showed that the country had made "outstanding achievements" in anti-money laundering in previous year.        A total of 50 money-laundering cases were jointly investigated by police, the central bank and the State Foreign Exchange Administration last year. These cases involved 570 million yuan (70 million US dollars) and 447 million US dollars.        China became an observer of the Financial Action Task Force on Anti-Money Laundering (FATF) in January this year. It aims to become a member of the group in 2006.

    12. China to expand anti-money laundering inspection to securities, insurance institutions • The Oeople’s Bank of China will expand its anti-money laundering special inspection to securities and insurance institutions, a senior banking official said Thursday. • Xiang Junbo, vice governor of the People's Bank of China, made the remark at a high-level seminar on anti-money laundering and combating the financing of terrorism, which was jointly hosted by the People's Bank of China and the World Bank. • Xiang said this move aims to give full play to the role of finance institutions as "the first defense line" for combating money laundering and financing of terrorism. • From April to December 2004, the People's Bank of China conducted special inspections on commercial banks' compliance with anti-money laundering regulations, making commercial banks pay more attention to the supervision over non-banking areas such as the transactions of real estate, and jewel and cultural item auctions, Xiang said.

    13. The provincial branches of the People's Bank of China will continue its special inspections on anti-money laundering this year, he said. • In April 2004, the People's Bank of China built up the China anti-money laundering Monitoring and Analyzing Center, which is responsible for collecting and analyzing information of Renminbi and foreign exchange in respect of anti-money laundering work, he said. • Since the establishment of the center, the People's Bank of China and the State Administration of Foreign Exchange have provided 1,500 pieces of suspicious anti-money laundering clue to the police, helping them to crack 51 criminal cases in this area. The cases involved 3.096 billion yuan and 460 million US dollars separately.

    14. The People's Bank of China is making research on the coordination and connection among data bases, payment systems and bank account management systems, so as to make its inspection work more efficient. • Meanwhile, the People's Bank of China is making efforts to sign memorandums on information exchange with other countries and regions in this regard, in a bid to face the new situation of more frequent international money-laundering activities. • Source: Xinhua/International Finance News

    15. And now • Criminals are now taking advantage of the globalization of the world economy by transferring funds quickly across international borders. Rapid developments in financial information, technology and communication allow money to move anywhere in the world with speed and ease. This makes the task of combating money laundering more urgent than ever. • The deeper "dirty money" gets into the international banking system, the more difficult it is to identify its origin. Because of the clandestine nature of money laundering, it is difficult to estimate the total amount of money that goes through the laundry cycle. Estimates of the amount of money laundered globally in one year have ranged between $500 billion and $1 trillion. Though the margin between those figures is huge, even the lower estimate underlines the seriousness of the problem governments have pledged to address.

    16. There have been a number of developments in the international financial system during recent decades that have made the three F's-finding, freezing and forfeiting of criminally derived income and assets-all the more difficult. These are the "dollarization" (i.e. the use of the United States dollar in transactions) of black markets, the general trend towards financial deregulation, the progress of the Euromarket and the proliferation of financial secrecy havens. • Fuelled by advances in technology and communications, the financial infrastructure has developed into a perpetually operating global system in which "megabyte money" (i.e. money in the form of symbols on computer screens) can move anywhere in the world with speed and ease.

    17. The end!