Money laundering is generally regarded as the practice of engaging in financial transactions to conceal the identity, source, and/or destination of illegally gained money by which the proceeds of crime are converted into assets which appear to have a legitimate origin. It is common to refer to money legally obtained as “clean”, and money illegally obtained as “dirty”.
In simple words, 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.
"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.
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.
Methods and techniques of money laundering
Money laundering is often described as occuring in three stages:
1. Placement, 2. Layering, 3. Integration
1. Placement: refers to the intial point of entry for funds derived from crimnal activites
2. Layering:; refers to the creation of complex networks of transaction which attempts to obscure the link between the intial entry and the exit of the laundering cycle.
3. Integration: refers to thte return of funds to the legitimate economy for later extraction.
Methods of money laundering: