Money laundering

Money laundering . is the processing of criminal proceeds in order to disguise their illegal origin.Money laundering involves the concealment of financial assets so that they can be used without the illegal activity that produces them being detected. Through money laundering, crime transforms the economic income derived from criminal activities into funds from an apparently legal source.


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  • 1 money laundering
  • 2 GAFI
  • 3 International scene
  • 4 ways to launder money
  • 5 How do you wash?
  • 6 Fountains

Money laundering

Money laundering is recycling illegal or “black” funds to insert them into the legal economy, with the aim of transforming criminal profits into respectable values.

Money laundering transforms illegal inputs into supposedly legitimate products, making the proceeds of crimes such as fraud, theft, and drug trafficking appear to be the product of honest labor , such as legitimate-looking bank accounts, real estate, and lavish goods. Thus criminals can enjoy the proceeds of their crimes and live hidden lives. In addition, they can use laundered assets to expand their criminal activities and increase their wealth and power, including corrupting political and police authorities to gain their protection.

Money laundering exists because there is fraud, tax crimes, illegal speculation, drug trafficking, corruption and, in general, profit-generating crimes. Given the close relationship between the crime that produces the profits and the laundering of those profits, it is very difficult to separate them, despite the fact that legally the two acts are treated independently.

Money laundering is a basic component of any profit-generating crime, since if the money is not laundered the crime is not profitable. Given the close relationship between the crime that produces the profits and the laundering of those profits, it is very difficult to separate them, despite the fact that legally the two acts are treated independently.

Such criminal activities can be drug trafficking, arms trafficking, acts of administrative corruption and any form of organized crime.

Money laundering has terrible effects on countries because:

  • Avoid detection of criminal activities
  • Provides new resources to criminal activities
  • Distorts financial markets
  • It destroys real economic activity generating virtual capitalism


The Financial Action Task Force on Money Laundering (FATF) is an intergovernmental organization whose purpose is the development and promotion of policies, at the national and international levels, to combat money laundering and the financing of terrorism.

It was established in 1989 by the G7, and in April 1990 it released its Forty Recommendations, which provide a blueprint for the action needed to fight money laundering. They were revised in 1996 and substantially reformulated in 2003 to reflect changing money laundering trends and anticipate future threats.

In 2001 , the 8 Special Recommendations were issued to combat the Financing of Terrorism, which were complemented in October 2004 with the issuance of the 9th special recommendation referring to the cross-border movement of cash. The FATF is made up of 33 countries or regional organizations

What is money laundering?

The FATF has formulated this definition of money laundering or money laundering:

  • The conversion or transfer of property, knowing that it derives from a criminal offense, with the purpose of hiding or disguising its illegal origin or Noticortas helping any person involved in the commission of the crime to evade the legal consequences of their actions.
  • Concealing or disguising the actual nature, source, location, disposition, movement, rights with respect to, or ownership of, property knowing that it derives from a criminal offense.
  • The acquisition, possession or use of goods knowing, at the time they are received, that it derives from a criminal offense or from participation in a crime.

International panorama

The phenomenon of money laundering has a marked international character. This phenomenon goes beyond the national borders of the States and implies its development in others, with the changes of sovereignty and jurisdiction that it entails. What is called “globalization of money laundering activities” Money laundering takes place on an enormous scale. The investment of illicit profits in legal companies is estimated at 500,000 million dollars a year, an amount equivalent to the sum of the gross national products of two thirds of the Member States of the United Nations. Little is said about the corrosive effects of money laundering on democratic and political institutions, although it is difficult to estimate the extent to which it undermines economies from currently available data. The truth is that no financial institution and no country are safe from this phenomenon. To date, efforts to prevent and combat money laundering have been hampered by language and cultural differences, and differences between penal codes and criminal justice practices, as well as the desire to protect national sovereignty. And as long as this phenomenon is not controlled, the solution to the problem will be increasingly difficult and the most serious consequences will fall on the fragile economies.

ways to launder money

Some of the most common forms of money laundering include the following:

  1. Structure: One or several individuals make multiple transactions with illegal funds for a certain period of time, in the same institution or in several financial institutions.
  2. Complicity of an official or organization: When employees of financial or commercial institutions facilitate money laundering by knowingly accepting large cash deposits, failing to fill out and submit cash transaction reports when necessary, filling out false ITEs, incorrectly exempting clients from filling out the required forms.
  3. Mix: When illicit proceeds are combined with legitimate funds of a company, and then the total amount is presented as income from the legitimate activity of said company.
  4. Shell Companies: The shell company may be a legitimate business that mixes the illicit funds with its own income. It can be physically located in an office or sometimes it can only have a commercial front.
  5. Purchases of goods or monetary instruments in cash: The money launderer buys tangible goods (automobiles, properties, etc.) or monetary instruments (bank and postal orders, manager or traveler’s checks, and securities), with the cash originated from criminal activity.
  6. Cash smuggling: Involves the physical transportation of cash; it may be hidden in luggage, or carried by the person acting as courier. Despite the limitations, money launderers have shown a great deal of imagination in finding new means of moving criminal cash proceeds.
  7. Telegraphic or electronic transfers: It is the most used to stratify illicit funds; in terms of the volume of money that can be moved, and by the frequency of transfers. As it allows them to send funds to their destination quickly, and the amount of the transfer is usually not restricted.
  8. Fraudulent sales of real estate: The launderer purchases a property with the illicit proceeds for a declared price significantly less than the actual value.
  9. The formation of portfolio or nominal companies (shell company): It is an entity that generally exists only on paper; does not engage in trading (unlike a shell company).

How is it washed?

Money Laundering Cycle.JPG

Criminal organizations have developed different ways of using legal activities to hide the illicit origin of their resources and try to give them the appearance of legality. These processes can be grouped into three basic forms of money laundering:

  1. Physical movement of money: implies the transfer or transport of large amounts of money, almost always in high denominations, a clear example is the well-known human couriers.
  2. Movement of money through the financial system: involves using the products and technologies offered by the financial sector (savings accounts, checking accounts, CDTs, insurance, shares, etc.) to move, transform or hide money from illicit activities.
  3. Movement of goods and services through the national and international trade systems (see money laundering in trade). wealth and power, even corrupting political and police authorities to gain their protection.

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