Decoding Financial Crime of Money Laundering

This article is about the definition & concept of financial crime of money laundering.

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The article explains the different stages involved in the entire process of money laundering. Impact of money laundering on economic stability, social governance on the jurisdiction prone to money laundering. Criminal money, once assimilated in the formal economy, negatively affects the reputation, and social & financial fabric of these jurisdictions.

To prevent criminals from using the financial system, financial institutions need to have a robust 'Anti Money Laundering (AML)' Compliance system & procedures.

There are various organizations who monitor the progress and implementation of AML Compliance in different jurisdictions. According to the strength of their AML compliance system and procedures, these jurisdictions are categorised in different risk categories regarding money laundering risk.

Introduction:

Financial crimes involve illegal activities that result in financial gain at the expense of other persons involved in financial transactions. These crimes often encompass deception, manipulation, misuse, or abuse of financial systems. Financial crimes are usually non-violent in nature, but they can have enormous economic impacts & trust deficits in financial system as well as in regulatory institutions. According to the Financial Action Task Force (FATF), some of the major financial crimes are as under:
a. Money Laundering

b. Terrorist Financing

c. Organised Crimes

d. Trafficking of humans & narcotics drugs

e. Sexual exploitation of children & women

f. Corruptions & fraud