“Money laundering” in its classic definition, is the result of activities with property and capital deriving from criminal activity, that is camouflaged and inserted into the monetary economic system, and making it apparently “legal”.
A person wishing to launder money does it in order to conceal the source of the property or the identity of its owners, with the aim of making an apparent break in the connection between this money and the illegal activities by which it was obtained.
Technological advances in financial systems worldwide, and the ease with which money is transferred in international markets, have also made it easier for anybody trying to launder money. In this way, money obtained in criminal activity such as dealing in drugs the trafficking of human beings, illegal running of gambling etc. may make its way to bank accounts spread throughout the world.
Money laundering methods are almost identical and are carried out in two stages:
1. Depositing money (generally cash) in a bank account while camouflaging its source and the identity of its owners.
2. After that, “innocent” financial transactions are generally carried out: conversion of currency, acquiring financial assets, transfers to other banks, and transfers to other countries.
After the source of the money has been covered up, the money becomes “clean” and legitimate. It is integrated into the general system, does not arouse suspicion, and is permissible for further use.
Authorities fighting crime in countries such as the US and Canada, the UK, countries in Europe, Australia, Japan, and other countries, have reached the conclusion that blocking the possibility of criminals “laundering” and “cleaning up” their money, is an important measure in the struggle against terror organizations, drug offenders, and the various sorts of organized crime. In order to succeed in this, many countries around the world have agreed that international standards and legislation are required to allow for cooperation between governments, law enforcement agencies, and financial institutions
The first international treaty for cooperation against money laundering (the Financial Action Task Force (FATF) was signed at the end of the 80’s. By virtue of the treaty, an international task force was set up to coordinate cooperation on the subject. In recent years, Israel has also become a full member in the worldwide struggle against terror and money laundering.
There are many ways to conduct money laundering, and stopping them is not easy. In light of the risks inherent in money laundering, such as the undermining of the stability of political, economic, and social systems in democratic countries, and even the endangering of human life, it is of utmost importance to continue the struggle with this phenomenon with all the means available to us.
For further information on the various subjects in the area of money laundering prohibition, click on the following links: