How is money laundering done?
Deposit: Money launderers deposit illegal proceeds in the official channels of the financial and banking system in several ways. This may be done by dividing large sums of cash into less obvious amounts that are then deposited directly into a bank account, or by purchasing a series of monetary instruments (checks, money orders, etc.) that are collected and deposited in accounts at another location.
Covering or camouflaging: – After the money enters the financial system, the second stage occurs. Coverage and camouflage: money launderers conduct a group of financial transactions with the aim of disguising their illegal source, so it is difficult to track and monitor them. Funds may be directed through the purchase and sale of investment tools, or it can simply be transferred Money is through a series of accounts in various banks around the world, and money launderers may disguise transfers as payments for goods or services, thus giving them a legitimate appearance.
Consolidation: After the money launderers have succeeded in processing their criminal profits through the first two stages, it moves to the third stage – the merger: the laundered money is re-injected and the money launderers use it and invest it in high-value assets in the legitimate economy. Where money enters the legitimate economy, money launderers may choose to invest the money, for example in real estate, luxury assets, or commercial projects.
The implications of money laundering?
First: economic risks
• Influencing fiscal and monetary policy.
• Impact on the banking system.
Damage to the reputation of the banking sector.
Contribution to inflation.
• The deterioration of the value of the national currency.
Increase taxes.
• Depriving society from benefiting part of its money
• Violation of equal competition between investors.
• Influencing the status and reputation of the country.
Second: social risks
Money laundering operations lead to the concentration of wealth in the hands of the members of organized crime, thus increasing the gap between the rich and the poor, which leads to the disintegration of the social structure, and this leads to prejudice to social values such as the values of work, production and belonging to the homeland and to causing harmful desires to economic construction, where money launderers resort to buying Or founding in one of the institutions of the economic sector and they remove it from its objectives for which it was established, and those in charge of it engage in actions that are compatible with the nature of the activities of the criminal group controlling these institutions.
Third: political risks
The laundered money may be used to finance and support terrorist activities aimed at changing the ruling systems in a country by force, which is a serious harm to that country.
Fourth: the risks of the judiciary and law enforcement agencies
The perpetrators of economic crimes such as the crime of money laundering seek to distance themselves from the reach of the law, so they resort by various means to penetrate the effective state agencies in this field and decision centers therein to influence them with what they have of money and power, which may weaken these agencies and reduce their ability to combat money laundering operations with the power of the perpetrators’ money Money laundering crimes may go unpunished, and with that money they commit new crimes.