What is money laundering

Money laundering relates to the disguise of the true nature, source or location of money. Money laundering is a serious offense as it enables criminals to evade taxes on large amounts of money that have been taken from illicit sources.

Money laundering explained

Money laundering is the act of concealing the true origins of money, particularly with relation to the conversion and transfer of the money. With money laundering, the money that is being dealt with has usually been derived from illegal sources, such as theft. Other examples could be from illegal arms sale, smuggling or other activities of organized crime.

The rise of global financial markets means that money laundering is now considered relatively easy to carry out. If carried out successfully, money laundering enables criminals to have thorough cover over their source of income, and provide a strong level of control over their funds.

In response to concerns over money laundering, the Financial Action Task Force on money laundering was established in 1989 to develop measures for national governments to implement effective anti-money laundering programs and reduce money laundering activity to the greatest extent possible.

It is important that banks and other financial institutions comply by the legislations that a jurisdiction imposes with regards to money laundering. Therefore, it is advised to seek the advice and guidance of a professional consultancy firm when forming a bank to ensure that you comply with the necessary legislations. Additionally, experienced consultants can further assist you with your bank specialization and necessary company structure.