Money laundering is a serious crime that comes with lengthy jail time. Due to its worldwide prevalence and the drastic effects on the economy of a country, banks have adopted effective measures to track and uncover individuals linked with this illicit act. Why do you think bank close individuals account on the slightest suspicion? They surely don’t want to leave any stone unturned, not when it comes to the laundering of funds. Worthy of note, you could be involved in a money laundering act without knowing; thus, it is crucial you know the examples of this act.
Below are some examples of money laundering:
- Structuring
- Trade-based laundering
- Cash-business laundering
- Bank capture
- Casino laundering
- Real estate laundering
Money laundering can be linked to several crimes, such as terrorism, drug trafficking, corruption, human trafficking, cybercrime, illegal wildlife trade, etc. Proceeds from this act can also be used to finance other higher crime, thus making it one of the most dangerous financial crimes that exist. As an account owner, it is essential that you have a little idea of what this activity entails. You never can tell; a little knowledge of this act could help you identify one and report the issue to exempt yourself. In this article, I’ll highlight some examples of this illegal act.
How Do Banks Track Suspicious Activity?
What Are Some Examples of Money Laundering?
Banks are usually strict when it comes to issues like funds laundering. A bank can shut your bank if it suspects you of laundering money. Even if the evidence it has isn’t substantial enough to link you to the act, your bank could go ahead and shut your bank account pending thorough investigation or explanation. That is enough indication of how serious banks consider this crime to be.
Worthy of note is that you could be guilty of money laundering without knowing, probably you committed it under duress or due to your ignorance. With that said, it is essential that you understand what it entails to launder money.
What is Money Laundering?
Funds laundering is a severe crime in which dirty money or funds earned via an illegal act like terrorism, smuggling, child trafficking, cybercrime, corruption are channeled into an operation that appears legal to wash the cash for mainstream use.
This common but illegal act always involves financial institutions like banks, and the goal is to make the dirty money appear as it came from a legal source. Instead of depositing a huge sum of money straight away, a money launderer will deposit the money in bits to avoid banks’ attention.
Illegal funds may be taken to a country where funds laundering laws aren’t stringent or well-enforced. However, this always requires the act of smuggling the cash across national borders.
Examples of money laundering:
Structuring:
Structuring, also regarded as smurfing, is when an individual takes the total amount of unclean funds and divides it into smaller, less suspicious amount. They always buy money orders or cashier’s checks to quell the suspicion of the bank.
Though money orders, including cashier’s checks, are very legal, depositing a huge amount of them with or around the same total could look dubious. With that said, if your profession requires that you deposit many cashier’s checks or money orders at a certain time, there is a tendency that you will be investigated for laundering of funds.
Trade-based laundering:
Like embezzlement, trade-based laundering involves modifying invoice or business documents to conceal dirty money as business profits. Since the money has a paper trail, the bank doesn’t consider the profits unclean. But, if your business documents display a weird, significant profit hike, the bank may consider it as a red flag, thus prompting an investigation.
Cash-business laundering:
If you deposit a huge among of cash for your mall business, spa, or other businesses that require huge cash, the bank has no way of detecting if the money is dirty or not. Since there is no easy way to prove the legality or illegality of your earnings, operating a business that requires heavy cash could lead to situations where you are falsely accused of laundering money.
Bank capture:
Bank capture happens when the money launderers own or operate the financial institution. In such a case, the funds can move throughout the bank, and they can also be transferred to other banks legally. Since the money moves without issues or attention from the bodies charged with investigating such crimes, this form of laundering can be hard to detect. However, if you own a financial institution and an individual uses it to secure his or her laundered funds, your whole bank could face scrutiny.
Casino laundering:
Gambling earnings or profits are licit and usually gotten in cash. By buying chips with unclean funds, gambling a little amount, and returning the entire chips for cash, an individual could theoretically calm all of the funds as gambling earnings. As a result, banks are suspicious of these winnings and may keep a close eye on you.
Real Estate Laundering:
Another way people launder money is via real estate. Theoretically, an individual could buy a piece of real estate property with cash and sell it immediately. Profits made from the sale is legal. Though known as a lawful technique, the rising use of property flipping for money-laundering acts can make the technique look suspicious.
Will Freezing Card Stop Pending Transactions?
What Is Considered as Money Laundering?
Money laundering is widespread. With a possible jail time of 20 years (if found guilty) and a fine of $500,000, it is safe to say that this act is considered to be very serious. While this act remains prevalent due to the fast fortune it brings to culprits, a few people out there don’t know what it entails. Some see it as an act of taking money that’s not yours, while others believe in misconceptions. What is really considered as money laundering?
Money laundering is a crime that involves depositing a colossal sum of dirty money earned from illegal acts in financial institutions like banks to cleanse it. These acts could be drug trafficking, sex crimes, cybercrime, child trafficking, corruption, smuggling, etc.
Not all funds laundering accusations are correct. If you were accused wrongly of this act, don’t hesitate to visit your bank. However, if the matter is spiraling out of control, it is best to involve a lawyer.
