"Money laundered" - what does this term mean and how does it actually happen?
We think some people are interested in learning the essence of this, to some extent, criminal procedure.
The concept of "laundering" has been in use since the early 20s, when the American mafia boss Al Capone came up with a scheme to legalize his proceeds from crime (from the illegal sale of alcohol, racketeering, prostitution). Its essence was that he attributed the source of these receipts allegedly to the income received from a huge network of his laundries, where the payment was carried out in cash. Since, at that time, it was practically impossible to identify the true number of laundry customers, it was also not possible to refute their illegal nature on the part of the state.
Currently, according to the law, all cash flow, both between individuals and legal entities, must be legalized and transparent. The nature of the origin of money should be understood, to a greater extent for controlling and tax entities.
Control of cash flows is one of the most important functions of the state, the implementation of which ensures its security, due to the integrity and stability of the financial and economic system.
If the state did not have this control, then this is a direct path to generating economic collapse and state division.Well, imagine that most of the funds (flows) are not controlled by the state system. What can this lead to:
- emptying the revenue side of the budget (absence of tax deductions)
- financing of illegal activities (banditry, terrorism)
- concealment of inflationary processes
In its classical form, money laundering means legalizing illegally obtained income. That is, money received from criminal activity or by illegal means, going through the procedure of "entanglement of traces" acquire the status of their transparency and legality.
Let's look at simple examples of the most commonly used schemes for the legalization of illegally earned money:
1 - trade fiction
Company A transfers money to the settlement account of another company B (its own) for allegedly rendered services, documenting the entire transaction process. Further, company B, in order to return the (already legalized) funds back to its owner, transfers them from its current account to the current account of company A as a replenishment of its authorized capital. After that, Company A can already legally dispose of the "laundered" money.
2 - offshore scheme
Firm A simply transfers funds to offshore accounts of its own subsidiary, where there is no need to legally confirm their legality. Further, the money can be withdrawn, both in cash, and participate in ordinary settlement operations on behalf of this offshore company.
3 - external loans or investments
Laundering company A allocates an external loan to a foreign company B, which returns them in the form of investments in the business of the washer. Further, after the legalization of the flow (financing of investment objects, equipment, services, etc.), money can be withdrawn either in the form of profit that these investments will give or in the form of payment of high wages financed by the same investments.
4 – rollbacks
For deliberately underestimating the price in the transaction, company A asks company B, which concluded this transaction, to withdraw a certain amount to a certain asset at the discretion of the owner of company A.
A similar procedure applies to transactions carried out on price increases.
5 – casino
Through intermediaries, for a certain percentage, the launder will exchange cash for casino chips. After that, he can return them to the casino and get his cash back as a legally paid winnings.
In the modern world, using modern methods of storing and transferring funds (cryptocurrency, electronic money, etc.), other methods of "laundering" are also possible. That is why some states are dismissive of these settlement instruments, from a legislative point of view. In other words - not that they do not want to, but simply cannot accept them due to the lack of transparent methods of monitoring (control) them.Although, from our point of view, this is a temporary process, since the liquidity of these instruments on a global scale is very high.
How to launder money – how to understand it? – Something like that!