An inappropriate or unlawful act of informing a suspect that he or she is the subject of a suspicious transaction report or that he or she is being investigated or prosecuted by the authorities. For more than 30 years, the global community has developed a comprehensive legal framework to combat money laundering. The development of this framework was linked to the 1988 United Nations Vienna Convention, which focused on the issue of laundering of the proceeds of drug trafficking. Subsequently, the Convention against Transnational Organized Crime or the Palermo Convention of 2000 and the Convention against Corruption of 2003 jointly extended the relevant derived offences to the ML offence. These three conventions thus form the basis of an updated global framework to combat money-laundering. However, the efforts of the Financial Action Task Force (Financial Action Task Force, 2012) have been more crucial to the growth of the international anti-money laundering legal regime. Reverse money laundering is a process that conceals a legitimate source of funds to be used for illegal purposes. [34] It is usually committed to finance terrorism,[35] but can also be used by criminal organizations that have invested in legitimate businesses and want to withdraw legitimate funds from official circulation. Undisclosed money obtained through disguised financial transactions is not included in official financial reports and could be used to evade taxes, give bribes and pay salaries „under the table“. [36] In an affidavit made on 24. In March 2014, FBI Special Agent Emmanuel V. Pascau alleged that several individuals associated with the Chee Kung Tong organization and California Senator Leland Yee were involved in reverse money laundering activities. The integrity of the banking and financial services market depends heavily on the perception that it operates within a framework of high legal, professional and ethical standards.

A reputation for integrity is one of a financial institution`s most valuable assets. Vervaele, J. (2013), „White Collar Crime and Money Laundering: A New Paradigm for the Criminal Justice System?“, Research Handbook on Money Laundering, Edward Elgar Publishing, New York, NY. The extension of the policies and laws of one country to the citizens and institutions of another country. Depending on the jurisdiction, anti-money laundering laws may extend prohibitions and penalties to other jurisdictions. If criminal funds come from theft, extortion, embezzlement or fraud, a money laundering investigation is often the only way to locate the stolen funds and return them to the victims. Another increasingly common type of money laundering is the use of online gambling. In a growing number of online games such as Second Life and World of Warcraft, it is possible to convert money into virtual goods, services or virtual money that can then be converted back into cash. [30] In 2013, Jean-Loup Richet, a researcher at ESSEC ISIS, examined new techniques used by cybercriminals in a report for the United Nations Office on Drugs and Crime. [28] A common approach was to use a digital currency exchange service that converted dollars into a digital currency called Liberty Reserve and could be sent and received anonymously. The recipient could convert the Liberty Reserve currency back into cash for a small fee.

In May 2013, U.S. authorities shut down Liberty Reserve and charged its founder and several others with money laundering. [29] Once the funds have entered the financial system, the second phase – or layer by layer – takes place. At this stage, the money launderer performs a series of transformations or movements of the funds to withdraw them from their source. Funds can be routed through the purchase and sale of investment vehicles, or the money launderer could simply transfer the funds through a number of accounts at various banks around the world. This use of widely dispersed accounts for money laundering purposes is particularly prevalent in jurisdictions that do not cooperate with anti-money laundering investigations. In some cases, the money launderer could disguise transfers as payments for goods or services, giving them a legitimate appearance. Anti-money laundering (AML) is a term primarily used in the financial and legal sectors to describe the legal controls that require financial institutions and other regulated entities to prevent, detect and report money laundering activities. Anti-money-laundering guidelines have been made known worldwide through the establishment of the Financial Action Task Force (FATF) and the promulgation of an international framework of anti-money-laundering standards. [43] These standards began to gain relevance in 2000 and 2001 after the FATF launched a process to publicly identify countries deficient in their anti-money laundering and international cooperation laws, a process colloquially known as „name and shame.“ [44] [45] Money can also be laundered through online auctions and sales, gambling sites and virtual gaming sites, where ill-gotten money is converted into in-game currency and then back into real, usable and untraceable „clean“ money. The system aims to assist institutions in combating money laundering and terrorist financing. In many jurisdictions, government regulations require financial institutions, including banks, securities dealers and money services companies, to establish such programs.

At a minimum, the anti-money laundering program should include: A common method of money laundering is to start a legitimate business called a „façade“ and replenish each day`s income. The company merges the illegal funds with the legitimate company funds to hide the source of the dirty money. By falsifying income, the company mixes legitimate funds with illegal funds, making it difficult to distinguish between the two. On 24 January 2019, the European Commission sent official warnings to ten Member States as part of a crackdown on lax enforcement of money laundering rules. The Commission has sent Germany a letter of formal notice, the first step in the EU`s legal proceedings against states. Belgium, Finland, France, Lithuania and Portugal received reasoned opinions, the second stage of the procedure, which could lead to fines.