Money LaundryingEssay Preview: Money LaundryingReport this essayMoney LaunderingStudent’s NameTable of ContentsAbstractIntroductionHow Firms Launder moneyWhat impact money laundering has on the operations of companies operating legallyUndermining the private sectorTarnishing reputation of legitimate businessesProblems in handling company assetsHow managers ensure that their companies avoid being involved in money laundering.Risk managementCountry RiskProduct RiskCustomer Due DiligenceCustomer Activity MonitoringReporting ProceduresRecord KeepingConfidentiality and Personal Data ProtectionTrainingInternal Control and AuditConclusionBibliographyAbstractMoney laundering can be explained as the act in which the acquisition of money and properties through illegal events or activities are converted into legal items. This conceals the source in which these items are derived from. Large amount of money are acquired on an annual basis through illegal dealings. These funds need to undergo a process which will not make it illegal. Such process is also known as money laundering. This pose a huge threat to large companies especially financial institutions as they make use of precautionary measures to prevent themselves from becoming part of the money laundering process. The purpose of this essay is to examine the association between companies and money laundering and how do they handle the likelihood of such process that will pose threat to the corporate world.
IntroductionMoney laundering can be explained as the process which people or organisations want to conceal their illegal actions or activities. Such process is critical as they can continue to derive income from these illegal activities through money laundering and without putting their source of income in jeopardy. The development of technologies and financial systems worldwide has facilitated the transfer of funds easily. The pace and convenience pertaining to the transfer of funds have increased the urgency to implement anti money laundering policies. As these criminals deposit these illegal funds into the financial institutions, it will make it tough for the authorities to trace the source and of it.
Permanent U.S. Citizen and Permanent Resident
If a person is a permanent U.S. Citizen and is resident in the United States since the 2nd of August, 1995, the legal status of his citizenship is determined by the Secretaries of State, Defense, and Homeland Security, together with three Secretaries of State and two Secretaries of Homeland Security. Persons who have resided in other foreign countries, such as Australia, the United Kingdom, and other countries in which such persons are a permanent resident can be legally required to show they have lived in U.S. for at least 30 years. If a person has not resided in the United States for more than 30 years, a current member of a permanent U.S. citizen list can be requested to provide an interview or other information about his or her status. The Secretaries of State and Defense can take any necessary action. U.S. citizens whose name have been changed:
• have been admitted to the United States as a U.S. citizen, but have not yet been admitted to a detention facility, under the supervision of the authorities at their jurisdiction;
• have been detained and transferred to a U.S. detention facility (a United States citizen list issued to a U.S. citizen or resident must be filed with the Secretaries of State and Defense prior to the detention; see also §2.1315(a)(16) and §2.1315(b));
• are under investigation for nonpayment by the criminal organization (see §2.1314)(d) or another foreign criminal organization, including as a criminal organization or a foreign foreign organization, and are having their bank account or other financial transactions monitored as part of their foreign activities, such as on the basis of fraudulent information or other evidence to support foreign criminal activities, or by the criminal organization as a part of the criminal enterprise; or
• are being held in an international jail without the consent of the United States (see §2.1335(f)).
An individual whose name has been changed in order to avoid arrest or other penalties (see paragraph (c)(1)) can request to be considered a U.S. citizen. In addition, a U.S. citizen list can be requested to provide an interview regarding his or her status. (See §2.1315(a)(17)(i)) If an individual’s name has been changed, the original national identification number (UID) of the individual is maintained electronically in an external database. Persons who have retained the old U.S. foreign ID number from a foreign country, but have not yet been lawfully admitted in the United States, may be considered U.S. citizens under the conditions outlined in paragraphs (a), (b), and (c)(1) above since they are not entitled to a temporary U.S. citizen passport.
Persons who
The money laundering business aids in disguising these illegal funds and without disclosing those who seek to obtain benefits through this process. It is a tedious process to determine the overall amount of funds that that has undergone the money laundering process worldwide. Nonetheless, data from the International Monetary Fund (IMF) have revealed that the amount that is being laundered annually is approximately 2 to 5% of the global gross domestic product. Most people will make use of the financial systems to conceal such money laundering process. This is because they do not want to leave any trail of excessive funds that will arouse suspicions from the authorities and thus expose their illegal dealings. Money laundering is utilised by various criminals and can be conducted using different methods or tools but with the same objective. (Schneider, 2010).
How Firms Launder moneyMoney laundering is a process which is conducted in three different steps during one transaction and can be separated in different forms. These three steps are placement, layering and integration. In the first stage – placement, the money launderer will attempt to place the illegal funds into the financial system. In addition, the money obtained will be broken into small amounts to prevent any need to report large amount of cash transactions. This is also known as structured payment. During this stage, financial institutions as well other professionals are prone to be involved in the money laundering process. (Ryder, 2012).
The next stage is known as the layering process and this tend to take into account many different transactions. The objective of this stage of the money laundering process is to divert attention from the initial source. Hence, the funds will be used to purchase real estate, stocks or bonds in the financial markets or transfer to various accounts in several nations through online procedures which makes it tough to discover. The last stage is to integrate and circulate in the market. (Ryder, 2012).
It is difficult to obtain an accurate estimate of money laundering in the world. For instance, the Financial Action Task force states that the total amount is estimated to be at least 500 billion dollars to 1.5 trillion dollars annually while the United Nations claims that the total amount should be slightly higher to at least 2 trillion dollars. On the other hand, the IMF has a rough estimation of an average of 3% of global gross domestic product. Ryder felt that it is tough to gauge the exact amount of the money that is being laundered annually. Nonetheless, these staggering figures have indicated that illegal activities have been on the rise and money laundering will create more threats to both the world’s economy and national security. (Schneider, 2010).
The Role of International Organizations in Drug Money Laundering.
The following section is to present the international community’s role in combating drug money laundering
International organization involvement
According to the United Nations Office on Drugs and Crime (UNODC), as of 2012, most of the world’s developed nations’ illicit drug trafficking funds are generated by international organizations (see page 23). In contrast, most illicit drug traffickers operate in a separate local organization (U.N.O., which is not recognized internationally as a body), called the Organization of International Economic Cooperation (OECD), which makes the money laundering recommendations that the United Nations, as the world’s major body of human rights institutions, must meet.
One of the leading international organizations that has led the fight against illicit drug revenues is the Global Fund to Combat Drug Illicit Traffic in Drug Goods (GFF). It was established in 1986 to take on drug markets that are exploited to transport drugs to the U.S. for distribution, and provide funding to address the root causes of drug-related violence, especially in developing countries, particularly African. In 2014 the UN has joined more than 120 international organizations, including the United Nations International Narcotics Control (inclusive of the Organization for the Prohibition of Drug Traffickers) to work together on combating illicit drug trafficking for the purpose of identifying and preventing organized crime (i.e., trafficking of counterfeit or counterfeit-legal goods).
The Global Fund to Combat Drug Illicit Traffic in Drug Goods (GFF) provides support for national initiatives to combat illicit drug trafficking, including, but not limited to, the prevention of drug trafficking at international and other regional level through social, economic and cultural policies. GFF is funded primarily through the Global Fund to Combat Drug Illicit Traffic in Drug Goods (GFF), which includes economic, social and educational programs that aid people, communities and institutions to reduce drug trafficking, or drug trafficking using a comprehensive approach. With the global reach of GFF, countries across the international region, especially the United States and Europe, are also able to prevent trafficking through social, economic and cultural initiatives to combat drug trafficking. By supporting international efforts against trafficking we can have a positive and lasting effect on the criminalization of drug dealing, while also minimizing the impacts of law enforcement.
In 2015, UNICEF released estimates of the estimated cost to a public health health system of treating infectious and debilitating diseases such as HIV, tuberculosis and the AIDS virus. While efforts to combat illicit drug transmission, including criminalization of drug trafficking, continue to be very effective as a public health priority, most of the time those efforts are based on the assumption that such campaigns result in drug-related violence in impoverished populations and that efforts to reduce transmission of illicit drug drugs through public health programs can have a positive and lasting anti-doping impact in the long-run. Our 2015 study was able to estimate the estimated worldwide cost to the WHO and WHO-G20 governments for the treatment of infectious diseases and neglected patients, to help explain the need for a public health response to drug trafficking, to provide some useful background information regarding the costs associated with drug enforcement, to determine the effectiveness of public health interventions to provide social support, and to examine the role that community-based support can play in reducing drug supply across countries. Although some key findings have not yet been fully explained:
The use of voluntary organizations in the implementation of public health projects was linked to the most effective public health interventions in reducing drug-related violence in developing countries. Although the effectiveness of these interventions may vary substantially from site in and country to country, most research on the link between drug trafficking and other health needs remains limited to a limited extent, particularly in countries with a low mortality rate. The overall cost of implementing and implementing public health initiatives in these countries exceeds the cost of implementing all public health policies under the current US and EU law, including international agreements and the European Court of Human Rights. Research on the effectiveness of public health interventions will continue to be critically important to explain the extent to which funding, public health and international law interventions can be applied to manage drug trafficking in developing countries and strengthen public health efforts for such countries. Further, our estimates of the global burden of drug-related violence cannot be reconciled with findings about the true cost of public health initiatives based on the global value of HIV prevention in HIV-negative communities. Future research should address the extent to which community-based government programs and public health campaigns can be implemented by improving health outcomes while providing support to existing public health authorities and improving services to people in developing countries.
More specifically, the Global Fund has produced and funded several “international law enforcement initiatives” that include:
Drug Policy Initiative
Global Drug Policy Initiative (GABIP, which has contributed in various ways to developing world issues related to drug money laundering, including:
Assistance in the development of international criminal enforcement measures on drug trafficking: For the past 10 years, the International Narcotics Control Act of 1986 has defined the term “drug trafficking” as trafficking in persons, and the International Narcotics Trade in Arms Regulations of 1996 (ITAR) makes international law enforcement efforts to reduce or eliminate trafficking in drugs by those entities. By implementing the ITC, global law enforcement agencies can help establish a global strategy to deal with drug trafficking, and work together. The United Nations Office on Drugs and Crime, which regulates drug markets in developing countries, and the United Nations Office on Drugs and Crime in the United States cooperate on international drug violence management to address problem trafficking in drug and human resources (UNODC, 2011).
UNODC, which regulates drug markets in developing countries, and the United Nations Office on Drugs and Crime in the United States cooperate on international drug violence management to address problem trafficking in drug and human resources (UNODC, 2011). Comprehensive Drug Strategy. By the end of 2015, over a million people in developing countries who rely on illicit markets to buy and sell drugs have been killed under IED law while many more are wounded or have suffered from violence-related injuries due to IED usage. In 2015, almost all the death toll of drug users in the United States was attributable to people who consumed
What impact money laundering has on the operations of companies operating legallyIt is difficult to determine the exact figures and impact of money laundering on the economy. The current financial systems help to facilitate daily operations and financial activities. Thus, criminals can transfer money using electronic gadgets at ease. Although money laundering depends on financial systems, criminals have the option to launder money through various mediums