By Robert Cohen
Money laundering is the world's third largest business after foreign exchange and oil and gas. The IMF puts the scale of money laundering at 2%-5% of the world's gross domestic product; that's upwards of $1.5 Trillion USD of illicit money circling the globe.
Indeed, it is said that if you walk a mile in any direction from the main central railway station in any major city in Europe or America - be it London, Paris, Rome, New York, Toronto, etc. - you will pass within "elbow's distance" of a property that is either owned, managed or has been constructed by "dirty money".
And that, most likely, in the past thirty days you have done business, knowingly or unknowingly, with a money launderer.
Origins of Money Laundering
Interestingly, money laundering has been around since biblical times. Back then, merchants often resorted to hiding their hard-earned profits to avoid punitive tax measures imposed by the despotic ruler of the day.
Money laundering, though, really didn't rise to prominence until the 1930's when it became the "weapon of choice" of a most unlikely mob boss: a 5 foot, 3 inch, Polish-born, New York Jew and 9th-grade school drop-out who - unusual for a gangster of that era - relied on his brain, rather than on firepower or muscle, to become the highest ranking non-Italian in what was referred to then as "The Syndicate". He was affectionately known as the "mob's accountant" - and his name was Meyer Lansky.
Note: "Money laundering", as an expression, is of fairly recent origin. The term first appeared in print in 1973 in newspapers reporting the Watergate scandal, referring to the activities of President Nixon's cronies, Attorney-General John Mitchell and Secretary of Commerce Maurice Stans, who secretly undertook to build a campaign war chest in violation of existing U.S. campaign laws.
Here's what you need to know -
Money laundering refers to the processing of criminal proceeds to disguise or legitimize their illegal origin. Typically, there is an attempt to deceive the authorities by making assets appear to have been obtained through legal means with legally-earned income or to be owned by third parties who, in fact, have no relationship to the true owner or source of the funds.
There are four factors common to all money laundering operations:
There are three distinct stages to the "wash cycle":
(a) Immersion (referred to also as "Placement" or "Consolidation")
(b) Heavy Soaping (referred to also as "Layering")
(c) Spin-Dry (referred to also as "Repatriation" or "Integration")