Do you want to know what money laundering is and how it works? You can read about it here!
Money laundering is the process of the substitution of the real illegally earned money by the fictitious legal money. So what are the money laundering stages and how does it work?
The stages of money laundering
1. Placement. The criminals put their illegal money into the legitimate financial institutions as the bank deposits in cash.
2. Detachment. How online money laundering works? By using e-money, the transactions are sent between different accounts and are transformed into another currency, which is used to buy something in order to change the form of money.
3. Integration. This is the final stage. The laundered money are introduced into the economy as the legitimate by being transferred to the bank accounts of the companies which were used for laundering or by selling expensive goods, which were bought during the second stage.
Facts about money laundering
Money laundering takes place on a daily basis all over the world;
Billions of dollars are laundered through the financial institutions every year;
Money laundering involves the illegal activities of criminals responsible for the financial transactions to hide the true owner of money, making it look like as if the money came from a legitimate source;
Banks and other legal structures get really suspicious if people are constantly transferring large amounts of cash;
The transaction should look legitimate; otherwise, the legal structures will keep track of the money and freeze it.
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Method 1. Structured deposits
Large amounts of money are divided into small parts (less than 10,000 dollars) and are deposited in different banks at different times. In the US it’s not allowed to make a transaction exceeding $10 000 at the same time. Otherwise, the bank is obliged to report these transactions to the federal government.
Method 2. Foreign banks
This method uses the underground banking system. The illegal money is transferred to offshore accounts to the countries, where it’s legal to keep bank secrecy. In other words, those are countries where you can transfer money anonymously.
The banks that are usually used for this purpose are situated in the Cayman Islands, Panama, the Bahamas, Bahrain, Singapore and Hong Kong.
In Asia they have banks that offer an alternative legal system that allows customers to deposit, withdraw and transfer money without any documentation, which makes it impossible to track it.
Who is usually responsible for money laundering?
Responsibility for money laundering
There are two main methods used by the government to detect and fight money-laundering: the legislation and the law.
The main obstacle for catching the criminals is the so-called "Banking secrecy". However, even this privacy doesn’t work that well anymore. Every day we hear something about the revealed laundered money.
There are severe methods of punishing criminals in the US. They get the imprisonment or huge fines that they have to pay.
How money laundering works in India
The Indian laws provide severe penalties for money laundering; but in this case, the account holder won’t get imprisonment. As some investigators note, most of the criminals want to deceive the poor people.
They would pay them 10-15 thousand rupees per month in exchange of taking their documents. "It is a huge amount of money for the poor families. Moreover, they did not know how their personal data will be used", - explains the police.
Bank of Baroda is one of the three largest banks in India, which was used for money laundering. It was founded in 1908 in the principality of Baroda, Gujarat. Along with 13 others India's large commercial banks, it was nationalized by the Government in 1969.
This is one of the leading banks of India, headquartered in Mumbai. It represents a network of more than 3 thousand companies across the country. The bank has more than 34 million customers worldwide. It is represented on five continents in 26 countries. It can also be found in New York, London, Brussels, Hong Kong, Dubai, Singapore, Malaysia and Australia, and other huge cities and countries.
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