Anti-Money Laundering

Money laundering is essential for criminal organizations that wish to use illegally obtained money effectively. Dealing in large amounts of illegal cash is inefficient and dangerous. Criminals need a way to deposit the money in legitimate financial institutions, yet they can only do so if it appears to come from legitimate sources.

[Important: Banks are required to report large cash transactions and other suspicious activities that might be signs of money laundering.]

The process of laundering money typically involves three steps: placement, layering, and integration. Placement puts the “dirty money” into the legitimate financial system. Layering conceals the source of the money through a series of transactions and bookkeeping tricks. In the final step, integration, the now-laundered money is withdrawn from the legitimate account to be used for whatever purposes the criminals have in mind for it.

Different ways to launder money

  • One of the most common techniques is to use a legitimate, cash-based business owned by a criminal organization. For example, if the organization owns a restaurant, it might inflate the daily cash receipts to funnel illegal cash through the restaurant and into the restaurant’s bank account. After that, the funds can be withdrawn as needed. These types of businesses are often referred to as “fronts.”
  • In another common form of money laundering, called smurfing (also known as “structuring”), the criminal breaks up large chunks of cash into multiple small deposits, often spreading them over many different accounts, to avoid detection. Money laundering can also be accomplished through the use of currency exchanges, wire transfers and “mules,” or cash smugglers, who sneak large amounts of cash across borders and deposit them in foreign accounts, where money-laundering enforcement is less strict.
  • Other money-laundering methods involve investing in commodities such as gems and gold that can easily be moved to other jurisdictions, discreetly investing in and selling valuable assets such as real estate, gambling, counterfeiting, and using shell companies (inactive companies or corporations that essentially exist on paper only).

What can you do to avoid money laundering?

  • Do not disclose any personal data such as your name, date of birth, place of birth, address, and email address, etc. to third parties. This includes copies of documents such as your ID, passport, birth certificate, driver’s license, and so forth.
  • Never give your bank account or bank and credit card details to third parties. This includes your email address, your password, and your bank and credit card pin.
  • Be critical of information you find on third-party websites. You can usually spot false or misleading information.
  • Do not open a bank account through a third party. We do not have financial institutions that confirm your identity through a video call. If you come across such a website, it is a fraud.