Money Laundering
Money laundering is a term used to describe the criminal practice of converting money obtained illegally to look like it was obtained from legal sources. In other words, the illegal source is made to look like a legal source after the laundering process is complete. It consists of three phases known as placement, layering and integration.
We shall look at how the process takes place. Huge sums of money are deposited in banks overseas that do not have strict disclosure laws. This is called placement. Subsequently this money from the first bank undergoes many financial transactions to different banks and through different bank accounts in different countries under various names. The deposits are continuously shuffled from one account to another, in different countries and in different currencies. This is called layering. At this point it becomes extremely difficult to track the money. Finally the laundered money is integrated into the mainstream economy by routing it into various business investments and purchase of expensive houses, limousines, jewelry, luxury yachts and real estates. In this way the source appears to be legitimate.
For example, illegal money obtained from the spoils of white collar crimes, is converted into clean money. So also money obtained as bribes by corrupt politicians and officials. The greed of these men, lure them to go on amassing wealth beyond their legal means.
For instance, take the case of real estate transactions. Huge amounts of money that are obtained illegally are first laundered. Such laundered money may be concentrated in the hands of organized groups. They would then offer very high premium prices for land that in reality may not be worth much, and buy out the small time land owners who will naturally be tempted when they are made such attractive offers that they cannot refuse.
Plot by plot, acre by acre, such well-organized syndicates would control huge tracts of land thereby inflating the land value in the entire precinct. The land would then be sold off to huge commercial land developers who would build commercial and residential complexes to be then sold at extremely high prices to clients from the upper echelons of society. Such land would then be out of reach of the ordinary buyer who only desires to build a small dwelling house for his family. This is when the authorities step in to assess the land value and fix a benchmark price of land in an equitable manner for a given locality.
It creates a parallel economy that puts more wealth into the hands of the unscrupulous and corrupt individuals. The socio-economic problems that it creates affect the entire society. The drug menace is another evil that is funded through tainted money that is laundered. We know how the drug menace destroys entire families and societies. To think that vast wealth is concentrated in the hands of a few who get it by illegal means while the majority works hard to make ends meet is certainly a social anomaly that has to be remedied.
So, unless a concerted effort is made to control these activities, laundered money can be used to fund terrorist and other nefarious activities, which is wreaking untold havoc across the globe. Everyday, the newspapers scream with headlines of some kind of terrorist activity or drug trafficking or some sort of scams in some corner of the globe. It is an international problem that calls for the attention of the powers that be.
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