The Negative Effects Of Money Laundering
Money Laundering
Meaning:
Money laundering is the term used to describe the process by which criminals disguise the original ownership and control of the proceeds of criminal conduct by making such proceeds appear to have derived from a legitimate source. In other words, Money laundering is the practice of engaging in financial transactions in order to conceal the identity, source, and/or destination of money, and is a main operation of the underground economy.
According to Serious Organised Crime Agency, UK, “Money laundering is any action taken to conceal, arrange, use or possess the proceeds of any criminal conduct”
Similarly, in the view of United Nations Office on Drugs and Crime, “Money laundering is the method by which criminals
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Though criminal money may be successfully laundered without the assistance of the financial sector, the reality is that hundreds of billions of dollars of criminally derived money is laundered through financial institutions, annually. The nature of the services and products offered by the financial services industry (namely managing, controlling and possessing money and property belonging to others) means that it is vulnerable to abuse by money launderers.
Areas affected by Money Laundering
The negative impacts of money laundering are severely affecting various sectors of the country. Due to advancement in technology money laundering is increasing as a white collared crime. The various areas affected by money laundering are as follows:
1. Economic Sector
Under the economic sector money laundering affects the financial, real and external sectors which are described below:
1. Financial sector
Money laundering especially affects the liquidity, integrity, reputation and credibility of a financial institution.
2. Real sector
Increase in artificial demand which can falsely trigger supply. The money laundered is divested to less productive areas like purchase of real estate.
3. External sector ( imports &
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The Integration Stage
The final stage of the money laundering process is termed the integration stage. It is at the integration stage where the money is returned to the criminal from what seem to be legitimate sources. Having been placed initially as cash and layered through a number of financial transactions, the criminal proceeds are now fully integrated into the financial system and can be used for any purpose.
There are many different ways in which the laundered money can be integrated back with the criminal; however, the major objective at this stage is to reunite the money with the criminal in a manner that does not draw attention and appears to result from a legitimate source. For example, the purchases of property, art work, jewellery, or high-end automobiles are common ways for the launderer to enjoy their illegal profits without necessarily drawing attention to
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