Type: Process Essays
Sample donated: Hope Carpenter
Last updated: September 19, 2019
Le-Khac et al (2009) refer to money laundering as ‘a process of disguising the illicit origin of “dirty” money and making them appear legitimate’. The process of money-laundering includes a series of multi-specialized deals designed to disguise the source of financial assets so that these assets and funds can be used as legitimate sources resulting from legitimate business operations (Agarawal and Agarawal, 2005). Douglas (2012) explains that it is the process of concealing proceeds of crime by moving it around in order to disguise their ‘nature, location, source, ownership, or control’.
More often than not, these proceeds of crime are moved around using the world’s financial system which is made up of interconnected financial institutions: financial institutions are interconnected by SWIFT. The United Nations Convention against Transnational Organized Crime (2000) defines money laundering as the conversion or transfer of property, knowing it is derived from a criminal offense, for the purpose of concealing or disguising its illicit origin or of assisting any person who is involved in the commission of the crime to evade the legal consequences of his actions. According to Linda (2004), the term money laundering is believed to have originated from the Laundromats owned by mafia.
The funds earned from gambling, prostitution, extortion etc were mixed with the cash earning of the Laundromats. These Laundromats thus offered an opportunity to wash or launder the tainted funds into clean funds. In the US, money laundering was formally made an offence when the Money Laundering Control Act of 1986 was passed. Prior to that, criminal investigations into money laundering were first established in 1919.
Tax evasion was rampant during those times as it was not customary for a bank to ask for sources of funds before accepting deposits. According to James (2000), as society and the instruments of society have become more sophisticated, so have the processes of hiding wealth. While a hole in the ground might have well served our ancestors, today to achieve the