Combating Money Laundering - Imperative to Cut down on Terrorism
FATF - Financial Action Task Force
GAO - General Accounting Office
UGAO - United States General Accounting Office
OECD - Organization of Economic Cooperation and Development
IFA - International Federation of Accountants
Money Laundering
What is Money Laundering?
The act of converting money earned from illegal activities such as drugs, arms smuggling and other crimes, including insider trading, embezzlement, bribery and computer fraud schemes as well as fraudulent pyramid marketing schemes, all of which generate vast sums money which can be moved between locations only by what is called money laundering. Since these large amounts are not declared to the government, and since these perpetrators have no intention of paying tax at any level to any authority, they devise a million ways to break their profits into different entities, invest and spend the money without falling into the hands of the police. Diverse methods are used for laundering this money, which they accomplish by disguising the sources changing the forms, or moving to locations, which are less likely to attract attention. The myth goes that the word money laundering was derived from Al Capone's string of launderettes in Chicago, which were used by him to input and legitimize his illegal income from extortion, prostitution and gambling rackets. However, the truth is that money laundering has acquired this name for its involvement with removal of stains and smells acquired by the money through its close proximity to the criminals who handle it. Money laundering is a process which criminals use to camouflage the origin, ownership and the source of criminal activity behind its generation. Their ultimate intention is to obtain a cover to legitimize the money. J.D. McLean defined money laundering as under (Rowan, et al., 1994):
"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 be 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...
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