COMMERCIAL LAW Essay Example | Topics and Well Written Essays - 1750 words

COMMERCIAL LAW - Essay Example The ways that are used to launder money include using the financial systems or services that cover up the tracks or sources from where the money is being transferred. Whereas, some countries may only consider money laundering when being used in a crime in that administration is being cheated on. The amount of money laundered every year is in billions, posing a policy threat and concerns for the governments. Many governments release the amount of money laundered each year either all around the world or only within their economy. The IMF (International Monetary Fund) in 1996 stated that about 2.3 percent of the global economy consisted laundered money. Therefore, FATF (Financial Action Task Force) is an organization set up to fight money laundering. FATF does not publish the exact figures of money laundered each year because it is impossible to estimate the right amount. Governments and other International bodies have made measurements in order to prevent and combat money laundering2. Financial institutions like IMF and FATF have made efforts to detect these sources and the transactions involving laundered money. International large scale criminal organizations and activities such as drug wars are the main benefactors of money laundering. Issues related to money laundering have existed as long as these international criminal organizations and activities have existed. It has been understood recently that anti-money laundering legislations have been the reason for the drop in both these acts of crime because these acts usually require transmission of funds that have untraceable sources. METHODS The process of money laundering consists of basic three steps are3: 1. Placement 2. Layering 3. Integration PLACEMENT: This is the process of introducing the cash within the financial system through some illicit means. LAYERING: This step consists of covering the tracks or camouflaging the illegal source. INTEGRATION: It is the acquiring the money generated from illegal sour ces from the transactions carried out by illegal funds. To chase away any kind of further suspicions, money launderers convert form of their dirty money into various types such as: 1. Smurfing is a method of breaking the money into smaller deposits of money or purchasing bearer instruments such as money orders and the depositing them into further smaller amounts. 2. Cash smuggling in bulk and then depositing it into offshore banks with greater chances of hiding money. 3. Depositing cash into the accounts of business that involves greater amounts of cash such as strip clubs, casinos, tanning spas etc. 4. Trading money by using over-value invoices to cover the movement of money. 5. Buying controlling interest in a bank that has less rigorous money- laundering legislations and then moving the money without having the bank scrutinize it. 6. Buying gambling chips from the casinos then cashing it after playing for a while in the form of a check or get a receipt proving it as a gambling wi n or spending the money in gambling with the higher odds then showing the wins while hiding the losses. 7. Through paying black salaries to the unregistered employees of a company and black cash is used to pay them. 8. Fictional loans 9. Hiding the money at home or other places 10. Tax evasion and also that legalize unreported assets in tax havens. ANTI-MONEY LAUNDERING IN UK Anti-money launderi