"Money laundry". Consequences and dangers ? Your washing steps...

In the classical theory of money laundering, the process is divided into the following macro steps:

1) PLACEMENT

This is the first step in the process. Washing is an activity that deals with a lot of cash generated by illicit activities such as the sale of drugs on the streets.

This money is put into the financial system or the retail economy or is smuggled out of the country of origin.

The primary need of scavengers is to remove money from their place of purchase to limit the danger that the authorities may detect the activity that generated it, and then to turn this money into other forms such as traveler checks, mail checks, in current accounts, high value goods, works of art etc ...

The ultimate goal of this step is to make the cash in kind be transformed into another form of value, ideally on deposit into a bank account or other liquid financial asset, so that you can move on to the next phase of the washing process.

2) STRATIFICATION, DIFFUSION or CAMOUFLAGE

With stratification, diffusion, or camouflage, the first attempt to cover up or disguise the source of money occurs, creating complex layers of financial and / or commercial transactions designed to disguise the origin trail and provide anonymity.

The purpose of camouflage or stratification is to disassociate illegal money from the source of the crime by creating a complex web of financial and / or commercial transactions for the purpose of making it difficult to identify any traces on the part of investigators and hunters and at the same time conceal the true source and ownership of the funds and create a new "clean" justification for their origin.

Typically, "camouflage layers" are created by transferring, through electronic transfers, the money in and out of open offshore bank accounts, in different countries, on behalf of bearer corporations with bearer shares.

Given that there are more than 500,000 electronic transfer transactions per day - representing more than USD 1 trillion - globally, the vast majority of which are legitimate, it is not possible (or at least not easy) to distinguish transactions involving source money of others. This provides an efficient way for washers to move dirty money. Other forms used by scrubbers are complex procedures with stocks, commodities, and futures. Given the global volume of daily transactions, and the high degree of anonymity often available, the chances that transactions are localized is quite small if not insignificant.

The washers also have the possibility of using certain commercial operations (purchases and sales of products between different countries) in the camouflage stages, this last system with its numerous variants seems to be in fashion in recent times.

One of these variants deserves mention because it represents a rising trend. A foreign company or entity contacts an industry, trader or trader (often commodities) and closes a large purchase contract with relative payment in sight (coming from some tax haven), successively, and according to clause provided in the contract, this company solves cancel the purchase and ask for the refund of the payment, minus possible fines, to another account in an "unsuspecting" country.

Alternatively, the company simply sells the contract of sale (rather than canceling it with a fine) at some discount, to some operator in the industry, typically in first-world countries, receiving the relative payment via a bank in an "unsuspected country" .

3) INTEGRATION

The final phase of the process, often interconnected or sometimes superimposed on the previous step.

It is at this stage that money is definitely integrated into the economic and financial system and is assimilated with all other assets in the system.

The integration of "clean money" into the economy is done by the washer who, through previous steps, makes this money appear as if it has been legally earned. At this stage it is extremely difficult to distinguish between legal and illegal wealth.

Popular methods among washers at this stage of the game:

establishment of anonymous companies in countries where secrecy is guaranteed. They can then grant loans based on the money laundered, which forms part of the company's capital, in the course of future legal transactions. In addition, to increase profits, they will also claim tax deduction on loan repayments and the interest they will pay themselves.

sending false export / import bills and overfeeding the goods the washermen can move the money from one company and country to another with the invoices that serve to confirm and hide the origin of money placed in financial institutions. (This method can also be used in the camouflage phase).

a simpler method is to transfer money (by Electronic Transfer) from a bank ownedor washer-controlled to a legitimate and "clean" international bank. This operation is simple because offshore banks can easily be bought in many tax havens (see section on frauds with phantom banks). There is a whole series of real estate operations, starting from incorporations to arrive at simple operations of buying and selling real estate, which lend themselves well to laundering operations. The authorities know this and so in several countries certain operations should be declared.The establishment of various types of financial activities is also widely used. In particular, laundresses are often favored by investments in financial (for lending) and in reinsurance companies. Of course, banks and insurers are also interesting. Companies that deal in commodity trading are also appreciated and lately they are getting trendy. The way in which the basic steps described above are performed depends primarily on the availability of mechanisms and channels of laundering and legal loopholes but also depends on the specific needs of organizations. This table provides some typical examples.

Step of Placement Step of Camouflage Step of Integration

Money deposited in a bank (sometimes with the complicity of employees or mixed with licit money). Electronic transfer abroad (often using shield companies or funds masquerading as if they were of licit origin). Evolution of a false loan or forged notes used to cover up money laundered.

Money exported. Money deposited in the banking system abroad. Complex web of transfers (national and international) make tracking the origin of funds virtually impossible.

Money used to buy high value goods, property, or business interests. Resale of assets / property. Entered by the sale of real estate, real estate or legitimate business appears "clean".

This is a small selection of systems used to "clean" dirty money.

It would be possible to write about several other systems but it should be taken into account that all the schemes on which they are written, by definition, have already been discovered and so are, or will soon be, low among criminals.

Surely many new systems are being used now without even being unmasked. But these "old" schemes, or innovative variants of them, are still being used in businesses of which no one is suspicious, and although the authorities know these systems, few ordinary people know them or even have access to such information.This is a small selection of systems used to "clean" dirty money.

It would be possible to write about several other systems but it should be taken into account that all the schemes on which they are written, by definition, have already been discovered and so are, or will soon be, low among criminals.

Surely many new systems are being used now without even being unmasked. But these "old" schemes, or innovative variants of them, are still being used in businesses of which no one is suspicious, and although the authorities know these systems, few ordinary people know them or even have access to such information.