Money Laundering and Corruption Name Name of instructor Date Overview The mafia is thought to be the origin of the word money laundering. During the coinage of the term, gangsters in the USA were earning a lot of money from illegal sources that included gambling, prostitution, extortion, and bootleg liquor (Salinger, 2005, p…
The most common business thus was Laundromats. A famous gangster known as Al Capone was one owner of such Laundromats where he made his dirty money look legitimate. However, in 1931, he was convicted for tax evasion. Many experts have conceded that the claim of origin of the phrase money laundering is a myth. Rather, they cite that since the money was gotten from illegal sources, it was considered “dirty”. In a bid to “cleaning it up” so that it looked legitimate, the phrase laundering of money was coined for this literal meaning. The process of money laundering is mainly meant to obscure the source of money by the use of a number of transfers and transactions. Meyer Lansky who was referred to as the Mob’s Accountant was very troubled that the monies gotten from the illegal activities could get people in jail for tax evasion. As such, he set about looking for the best way to launder money without consequences. It was when he discovered the value of Swiss banks. Here, he used the loan back concept where money would be “loaned” to people by the compliant foreign banks and then declared to the revenue with the bank even taking a tax deduction. Money laundering is a crime. However, since its conception, the term was first publicly used in the 80s where drug trafficking was the context in which it was mostly applied. The trigger for action against drug trafficking was the realization by the government that huge profits were being made at the expense of the society. The US government anticipated that such money would eventually corrupt and contaminate its structures. Money laundering is now regarded as a global phenomenon affecting all nations. The complications of dealing with this organizational and transactional crime are many since it is very adaptable and flexible assisted by the latest technology and the contracting of professionals. The global nature of the operations is also a challenge for the authorities to deal with. The presence of a large pool of resources, the ingenuity of its operators and the quest for profits are the major threats of money laundering as it expands and moves into new frontiers every day. Corruption is treated as an incurable disease because it affects every core of the social and moral fiber. There are many evils that are associated with corruption. Indeed, in most cases, it starts small and then grows into a cancer to all sectors of society, government and the economy. There is however no clear-cut correlation between the effects of corruption and the economy. The most visible consequences of corruption are the inequalities in the society with some earning more than others and an erosion of individual morals and the degradation of the moral fiber of the society in general. These are however not parameters that can be considered as being able to determine the economic consequences of corruption on the national scale. There are nations that do have a very high corruption index but yet are economically sound. There are also those that exhibit low levels of corruption but are poor performers in the economy. This is not an indictment to corruption but it is meant to show that corruption is so disguised in the society that it may affect or it may not affect the general economy (Mauro, 1995). Effects of money laundering and corruption The role that financial institutions play in the process of money laundering is the major contributor to the problems associated with the ...
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(Money Laundering and Corruptions Essay Example | Topics and Well Written Essays - 2500 Words)
“Money Laundering and Corruptions Essay Example | Topics and Well Written Essays - 2500 Words”, n.d. https://studentshare.net/law/4499-international-business-law.
The author states that the government and various financial institutions have made significant efforts of preventing and detecting and fraud issues. This is when making transactions issues that involve dirty money. Corruption is a moral impunity that involves embezzlement of funds and bribery issues.
[Your full name] [Instructor’s name] [Course name and code] December 8, 2011 Money Laundering Introduction According to the Article 1 of the 1990 European Communities (EC) Convention on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime (Council of Europe), the term money laundering is defined as: The conversion or transfer of property, knowing that such property is derived from serious crime, for the purpose of concealing or disguising the illicit origin of the property or of assisting any person who is involved in committing such an offence or offences to evade the legal consequences of his action, and the concealment or disguise of the true nature, source, location,
Thus, it involves “turning dirty money into clean money”, “washing drug money”, and “disguising criminal money”. The concept of money laundering has evolved over the years and hence money legitimately earned but not disclosed through above means for avoidance purposes involves money laundering.
Money laundering is the result of various illegal activities. For example, across the US-Mexico border the drug trafficking business and illegal cash transfers from the US to Mexico is estimated at somewhere between $19 and $29 each year. It is difficult and cumbersome to understand how and in what way this cash is collected and delivered.
Money laundering needs to be understood by all those involved in the financial system.
Money laundering is defined as a process which a criminal engages in a series of financial transactions that attempt to hide the origin and ownership of property obtained by illegal acts in an attempt to increase assets under the disguise of legal sources.
The 1990 convention was modeled on the forum of FATF developed by the G-7 countries, but over the years with increasing developments in the tools for fighting money laundering the convention has become increasingly inadequate.
The need for rectification has forced the member states into revisiting the convention and drawing up a protocol that would adapt the effective features of the 1990 convention combined with recent developments in line with current requirements of sophisticated technology and vulnerability of the non financial sector against money laundering.
Criminals and terrorist organisations have a need for hiding funds acquired illegally through morally repugnant means and terrorist organisations need to launder money to hide their sources of finance to ensure that their operatives receive funding without raising
This crime is committed by the drug dealers, Big business men, Politicians, Illegal sales of arms, smuggling, corrupt officials, Mafia and private individuals and even states. This whole concept is basically the conversion of black money
First of all, it is vital that the concerned organizations put in place measures that can identify apprehensive activities that may be related to money laundering. Such measures would include ability to detect suspicious practices especially in the banks that would
The coverage of the predicate offense of money laundering in many countries such as United States has been expanded to include all crimes, which seek to launder criminal proceeds. Money laundering comprises of the following undertakings:
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