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Money Laundering

What is Money Laundering?

Understanding Money Laundering

Money laundering is a process by which individuals or organisations attempt to conceal the origins of illegally obtained money. This illicit activity involves disguising the proceeds of crime, such as drug trafficking, corruption, or tax evasion, as legitimate funds. By doing so, criminals can integrate their ill-gotten gains into the financial system, making it difficult for authorities to trace the money back to its criminal source.

Definition of Money Laundering

Money laundering involves a series of complex financial transactions aimed at obscuring the source of the funds. It typically consists of three stages: placement, layering, and integration. During the placement stage, the illicit funds are introduced into the financial system. In the layering stage, the money is moved through a series of transactions to further obscure its origin. Finally, in the integration stage, the laundered funds are reintroduced into the economy as apparently legitimate wealth.

History and Evolution of Money Laundering

The practice of money laundering dates back centuries, with historical examples including the smuggling of gold and precious stones to evade taxes. However, the modern era of money laundering can be traced to the rise of organised crime and the expansion of global financial networks in the 20th century. As financial systems became more interconnected, criminals found new ways to exploit loopholes and conduct illicit financial activities.

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