Thursday, December 26, 2019
Money Laundering Free Essay Example, 1750 words
According to it, the Law on Prevention of Money Laundering is to be implemented to make sure that money laundering does not take place at all. Article 2 of the Federal Act on Combating Money Laundering and Terrorist Financing in the Financial Sector, also called as Anti-Money Laundering Act (AMLA), defines the financial intermediaries that are at vulnerable end in money laundering business (Federal Authorities of the Swiss Confederation). These include banks, fund managers, investment companies, insurance institutions, security dealers, casinos, and persons who carry out credit transactions and provide their services for payment transactions. Stages of Money Laundering There are three stages of money laundering. Placement The first stage of the washing cycle of money laundering is placement. Being a cash-intensive business, large cash is generated from illegal activities which is then placed in the economic structure or is smuggled out of the country, so that the location of acquisition of that cash can be covered (Levy 2-5). In this way, the authorities cannot figure out the location. The cash acquired is also converted into other forms like postal orders. We will write a custom essay sample on Money Laundering or any topic specifically for you Only $17.96 $11.86/pageorder now Layering The first step in the layering phase is the concealment of the source of ownership of funds by way of creating such complicated layers of transactions that aim at impersonating the audit trail by providing inscrutability (Frank 256). The complicated mesh of financial transactions tends to dissociate the illegal money from its source. The audit trail, the source, and the ownership of source, all are concealed. We can never know how much clean or dirty is wire transfer which is an excellent way the launderers can move money in and out of the country. The risks of being traced are meager. Integration Integration is the final stage in money laundering in which the cash acquired through illegal means is integrated into the legal financial system of the country and is assimilated with the systemÃ¢â¬â¢s assets (International Monetary Fund (Legal Dept) 146). This makes the illegal money appear as legal. This is the stage at which it is very hard to differ between legal and illegal money. For this purpose, anonymous companies are started which grant loan to themselves for future legal transactions. Money is also transferred to any legitimate bank through ETF (electronic funds transfer). Effects of Money Laundering on the Economy This section discusses the effects of money laundering on the economy on three different levels.