moneylaundering

Money laundering is the process of concealing the origins of funds derived from illegal activities, so they appear to come from legitimate sources. It enables criminals to enjoy the proceeds of crime and to integrate them into the formal economy.

The classic model describes three stages: placement (introducing illicit funds into the financial system), layering (conducting a complex series of transactions to obscure the origin), and integration (reintroducing funds into the economy as apparently legitimate wealth). Some schemes mix methods or use cyber means or exploit trade.

Common sources include drug trafficking, corruption, fraud, tax evasion, and organized crime. Techniques used include structuring deposits, shell companies, trade-based money laundering, real estate purchases, gambling, offshore accounts, and increasingly virtual currencies and digital payment systems.

Impact and regulation: money laundering can distort markets, undermine financial integrity, and enable other crimes including terrorism financing. To counter it, many jurisdictions implement anti-money laundering and countering the financing of terrorism regimes, including know-your-customer requirements, customer due diligence, suspicious activity reporting, and record-keeping. International standards are promoted by the Financial Action Task Force, with cooperation across borders and financial institutions as a key element of enforcement.

Challenges and responses: ongoing issues include beneficial ownership transparency, cross-border cooperation, and gaps in regulation governing virtual assets and emerging payment technologies. Efforts focus on risk-based supervision, enhanced transparency, and coordinated penalties to deter illicit flows.