Illegal arms sales, smuggling, and the activities of organized crime, including, drug trafficking, extortion, fraud, and prostitution, can and do generate significant amounts of money. Embezzlement, insider trading, bribery and computer fraud schemes can also produce large profits and create the incentive to "legitimize" the ill-gotten gains through money laundering. When a criminal activity generates substantial profits, the individual or group involved must find a way to control the funds without attracting attention to the underlying activity or the persons involved. Criminals do this by disguising the sources, changing the form, or moving the funds to a place where they are less likely to attract attention.
There are three recognized stages in the money laundering process:
- Placement involves placing the proceeds of crime in the financial system.
- Layering involves converting the proceeds of crime into another form and creating complex layers of financial transactions to disguise the audit trail and the source and ownership of funds.
- Integration involves placing the laundered proceeds back into the economy to create the perception of legitimacy.
Terrorist Financing
Terrorist Financing is the generation of funds by any means, whether it be through personal donations and profits from businesses, donations to charitable organizations or organized criminal activity. The objective of this activity is to intimidate and compel a government to do something against its will. This is done by killing, seriously harming or endangering innocent people, causing substantial property damage, or by seriously interfering with or disrupting essential services, facilities or systems.
"Guidance in Uncertain Times" |
