Money Laundering

1
Money Laundering

• The process of creating the appearance that large
  amounts of money obtained from serious crimes,
  such as drug trafficking or terrorist activity,
  originated from a legitimate source.

2

• the metaphorical "cleaning of money" with regard
  to appearances in law, is the practice of
  engaging in specific financial transactions in
  order to conceal the identity, source and/or
  destination of money and is a main operation of
  underground money.

3

• In the past, the term "money laundering" was
  applied only to financial transactions related to
  organized crime. Today its definition is often
  expanded by government regulators (such as the
  United State Office of the comptrollerof the
  Currency) to encompass any financial transaction
  which generates an asset or a value as the result
  of an illegal act, which may involve actions such
  as tax evasion or false accounting. As a result,
  the illegal activity of money laundering is now
  recognized as potentially practiced by
  individuals, small and large businesses, corrupt
  officials, members of organized crime (such as
  drug dealers or the Mafia) or of cults, and even
  corrupt states or intelligence agency, through a
  complex network of shell companies based in
  offshore tax havens.

4

• The increasing complexity of financial crime, the
  increasing recognised value of so-called
  financial intelligence in combating transnational
  crime and terrorism, and the speculated impact of
  capital extracted from the legitimate economy has
  led to an increased prominence of money
  laundering in political, economic and legal
  debate. In many jurisdictions, money laundering
  is seen as an "activity based" offense.

5
HISTORY

• Modern development
• The act of "money laundering" was not invented
  until the Prohibition era in the United States,
  but many techniques were developed and refined
  then. Many methods were devised to disguise the
  origins of money generated by the sale of
  then-illegal evasion beverage Following AL
  capones 1931 conviction for tax evasion, mobster
  Meyer Lansky transferred funds from Florida
  "carpet joints" (small casinos) to accounts
  overseas. After the 1934 Swiss Banking Act which
  created the principle of bank secrery, Meyer
  Lansky bought a Swiss bank where he would
  transfer his illegal funds through a complex
  system of shell companies, holding companies and
  offshore accounts.

6

• The term of "money laundering" itself does not
  derive, as is often said, from the story that Al
  Capone used laundromats to hide ill-gotten gains.
  It was Meyer Lansky who perfected money
  laundering's older brother, capital fight",
  transferring his funds to Switzerland and other
  offshore places. The first reference to the term
  "money laundering" itself actually appears during
  the Watergate scandal. US President Rchard Nixon
  "committee to Re-elect the President" moved
  illegal campaign contributions to Mexico, then
  brought the money back through a company in
  Miami. It was Britain's guardian newspaper that
  coined the term, referring to the process as
  "laundering."

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International initiatives against money laundering

• The 1980s witnessed the international trend for
  the criminalization of money laundering as a
  discrete crime. The US and the UK have done so in
  1986, and the 1988 Vienna Convention has required
  State Parties to introduce this crime in their
  domestic legal systems. In 1989, the FATF was
  created. Its first report, issued in 1990,
  recommended the criminalization of money
  laundering. In 1991, the European Union required
  its Member States to 'prohibit' the laundering of
  funds derived from drug offences the original
  Directive was revised in 2001 and replaced by
  another in 2005.

8
PROCESS

• Money laundering is often described as occurring
  in three stages placement, layering, and
  integration.
• 1 Placement refers to the initial point of entry
  for funds derived from criminal activities.
• 2 Layering refers to the creation of complex
  networks of transactions which attempt to obscure
  the link between the initial entry point and the
  end of the laundering cycle.
• 3 Integration refers to the return of funds to
  the legitimate economy for later extraction.

9
Anti-money laundry in China

• China still facing tough situation in anti-money
  laundrying official
• China to expand anti-money laundering inspection
  to securities, insurance institutions

10
China still facing tough situation in anti-money
laundrying official   

•      China is still facing a tough situation in
  anti-money laundering, said You Quan, deputy
  secretary-general of China's State
  Council.        He called on relevant
  departments to establish an coordinated system
  and speed up building of a corresponding legal
  system with Anti-money laundering Law as the
  core.        You Quan made the remarks while
  attending a conference on anti-money laundering
  in Beijing on Friday, which was chaired by Xiang
  Junbo, vice governor of the People's Bank of
  China (PBOC) .        There is still a room to
  improve for China's anti-money laundering efforts
  compared with international standard and the
  requirement of building a perfect market-oriented
  economic system, You said.

11

•         Participants of the conference included
  representatives from 23 departments such as the
  State Council, the Ministries of Foreign Affairs,
  Public Security and Finance as well as the State
  Foreign Exchange Administration.        A report
  on China's anti-money laundering effort in 2004,
  published by China's central bank on July 12,
  showed that the country had made "outstanding
  achievements" in anti-money laundering in
  previous year.        A total of 50
  money-laundering cases were jointly investigated
  by police, the central bank and the State Foreign
  Exchange Administration last year. These cases
  involved 570 million yuan (70 million US dollars)
  and 447 million US dollars.        China became
  an observer of the Financial Action Task Force on
  Anti-Money Laundering (FATF) in January this
  year. It aims to become a member of the group in
  2006.

12
China to expand anti-money laundering inspection
to securities, insurance institutions

•        
• The Oeoples Bank of China will expand its
  anti-money laundering special inspection to
  securities and insurance institutions, a senior
  banking official said Thursday.
• Xiang Junbo, vice governor of the People's Bank
  of China, made the remark at a high-level seminar
  on anti-money laundering and combating the
  financing of terrorism, which was jointly hosted
  by the People's Bank of China and the World Bank.
  
• Xiang said this move aims to give full play to
  the role of finance institutions as "the first
  defense line" for combating money laundering and
  financing of terrorism.
• From April to December 2004, the People's Bank of
  China conducted special inspections on commercial
  banks' compliance with anti-money laundering
  regulations, making commercial banks pay more
  attention to the supervision over non-banking
  areas such as the transactions of real estate,
  and jewel and cultural item auctions, Xiang said.

13

• The provincial branches of the People's Bank of
  China will continue its special inspections on
  anti-money laundering this year, he said.
• In April 2004, the People's Bank of China built
  up the China anti-money laundering Monitoring and
  Analyzing Center, which is responsible for
  collecting and analyzing information of Renminbi
  and foreign exchange in respect of anti-money
  laundering work, he said.
• Since the establishment of the center, the
  People's Bank of China and the State
  Administration of Foreign Exchange have provided
  1,500 pieces of suspicious anti-money laundering
  clue to the police, helping them to crack 51
  criminal cases in this area. The cases involved
  3.096 billion yuan and 460 million US dollars
  separately.

14

• The People's Bank of China is making research on
  the coordination and connection among data bases,
  payment systems and bank account management
  systems, so as to make its inspection work more
  efficient.
• Meanwhile, the People's Bank of China is making
  efforts to sign memorandums on information
  exchange with other countries and regions in this
  regard, in a bid to face the new situation of
  more frequent international money-laundering
  activities.
• Source Xinhua/International Finance News

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16
And now

• Criminals are now taking advantage of the
  globalization of the world economy by
  transferring funds quickly across international
  borders. Rapid developments in financial
  information, technology and communication allow
  money to move anywhere in the world with speed
  and ease. This makes the task of combating money
  laundering more urgent than ever.
• The deeper "dirty money" gets into the
  international banking system, the more difficult
  it is to identify its origin. Because of the
  clandestine nature of money laundering, it is
  difficult to estimate the total amount of money
  that goes through the laundry cycle. Estimates of
  the amount of money laundered globally in one
  year have ranged between 500 billion and 1
  trillion. Though the margin between those figures
  is huge, even the lower estimate underlines the
  seriousness of the problem governments have
  pledged to address.

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• There have been a number of developments in the
  international financial system during recent
  decades that have made the three F's-finding,
  freezing and forfeiting of criminally derived
  income and assets-all the more difficult. These
  are the "dollarization" (i.e. the use of the
  United States dollar in transactions) of black
  markets, the general trend towards financial
  deregulation, the progress of the Euromarket and
  the proliferation of financial secrecy havens.
• Fuelled by advances in technology and
  communications, the financial infrastructure has
  developed into a perpetually operating global
  system in which "megabyte money" (i.e. money in
  the form of symbols on computer screens) can move
  anywhere in the world with speed and ease.

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The end!