Money Laundering Prevention through International Law Enforcement Model

Money Laundering Prevention through International Law Enforcement Model

Introduction

The purpose of this paper is to enlighten and explore the scenario of money laundering in a holistic manner. The core objective of this paper is to analyze different scenarios as perspectives that are related to the practices of money laundering. Nonetheless, the paper highlights diverse influence of money laundering on the economy and the financial institutions. In addition, the banking industry is one of the distinct industries that are severely affected by the practice of money laundering. Money laundering is an unethical practice that deteriorates not only the social dimensions; but, it is also categorized as one of the most serious criminal activities. Money laundering belongs to the category of white-collar or organized crime units. The people involves in the practice of money laundering have tremendous contacts with the top hierarchy of the legislative departments. Hence, the trials and prosecutions of the culpable involved in the practices of money laundering are significantly pressured by the political parties and other factors.

The problem for these organisations, however, is how to disguise the illegal origins of these funds. Using 'dirty money' raises suspicions among law enforcement and may allow the money to be traced to illegal activities. The most common money laundering method is to transfer funds out of the country, either physically or through electronic wire transfers, while ensuring that the source of the funds is untraceable. Once laundered, the money can be more easily used in legitimate ventures. Once again, globalisation allows money to be moved around the world with considerable speed and ease. Millions of dollars can be instantaneously transferred with the click of a button. Left unchecked, money laundering can cause not just a nation's economy to become unstable but the global economy as well, given the interdependence of countries around the world, and is thus a serious national and international security threat.

Money Laundering History

Criminals around the world engage in money laundering in order to disguise their illegal activity and business. When financial gain from such pursuits as drug trafficking, prostitution, embezzlement, insider trading, and other illegal business activity must be hidden from law enforcement and the general public, crime organizations make the money appear to be from legitimate sources. This is the beginning of the process of money laundering, an act known all around the world and one made particularly famous by the Mafia during the Prohibition era of the 1920s. Money laundering required the absence of any documentation or “paper trail” that might lead law enforcement or government officials to notice irregularities in income, both for individuals and businesses. Such activities as drug trafficking, extortion, and prostitution, for instance, were “cash-only” businesses to increase the difficulty of tracing money transactions and the subsequent illegal activity.

The first step in a money laundering scheme would be the introduction of the illegal profits into a particular financial system, dividing large amounts of cash into smaller amounts that would be less likely to get ...