Money Laundering

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J.D. Mclean defined money
laundering in the International Judicial Assistance as:

"Although the proceeds of crime will be kept as capital for further criminal
ventures, the sophisticated offender will wish to use the rest for other
purposes. If this is to done without running a risk of detection, the money
which represents the proceeds of the original crime must be "laundered"; put
into a state in which it appears to have an entirely respectable provenance"

It is important to bear in mind that money laundering is a process (often a
highly complex one) rather than a single act. In an effort to expose and
analyse this phenomenon it has become common to use a three-stage model which
encompasses an ideal money laundering scheme. The three stages are as follows:

* Placement Stage

This is where cash derived directly from criminal activity (e.g. from
sales of drugs) is first placed either
in a financial institution or used to purchase an asset.

* Layering Stage

...

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a 60% deposit with the understanding that the order won't be put through for
three months. Before the three months are up the money launderer cancels the
order and gets the deposit refunded minus a penalty. The money launderer will
always be willing to pay the penalty because although he/she will want to get as
much back as possible, what he/she really wants is the money back clean.

Money Laundering is said to be the third biggest industry by value world-wide.
Research in the USA has shown that 90% of currency bills in circulation are
contaminated with narcotics. In the UK, similar research showed 40% to be
contaminated. In 1994, about 15,000 suspicious transactions were reported ...

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