Page 35 - Banking Finance April 2018

ARTICLE

TRADE

BASED

MONEY

LAUNDERING

M oney laundering is the process of clouding Money laundering is an offence in its own right, but it is also

closely related to other forms of serious and organized crime
source of money by using financial systems or
services. Profits of crime and corruption are
as well as the financing of terrorism.
transformed into legitimate assets. Typically
money laundering involves three steps: Placement, Layering Reverse money laundering : It is a process that disguises a
and Integration. First, the illegitimate funds are furtively legitimate source of funds that are to be used for illegal
introduced into the legitimate financial system. Then, the purposes. It is usually executed for the purpose of financing
money is moved around to create confusion, sometimes by terrorism, but also be used by criminal organizations that
wiring or transferring through numerous accounts. Finally, have invested in legal businesses and would like to withdraw
it is integrated into the financial system through additional legitimate funds from official circulation. Unaccounted cash
transactions until the, dirty money appears clean. received via disguising financial transactions is not included
in the official reporting and could be used to evade taxes,
Money laundering was first seen in individuals hiding wealth hand in bribes and pay under the table salaries.
to avoid taxation or confiscation or a combination of both.
Some of the common methods of money laundering
About the author are :
Y Tax evasion : Tax evasion and false accounting practice
G. Janardhan are the most common types of money laundering.
Chief Manager
Union Bank of India Y Structuring : Often known as smurfing, which is a
Staff College method of placement whereby cash is broken into small
Bengaluru
deposits of money, used to defeat suspicion of money

BANKING FINANCE | APRIL | 2018 | 35