What is Money Laundering?
Money laundering is the process of disguising the origins of illegally obtained money, typically by passing it through a complex sequence of banking transfers or commercial transactions. It is a criminal offense that aims to make the money appear as if it comes from a legitimate source.
Methods of Money Laundering
There are various methods used for money laundering, including structuring deposits to avoid reporting requirements, using shell companies to hide the true owners of the funds, and investing in high-value assets like real estate and luxury goods.
Examples of Money Laundering
- Using cash-based businesses like casinos or restaurants to mix illegal funds with legitimate revenue
- Transferring funds through a series of bank accounts in different jurisdictions to confuse authorities
Case Studies
In the 1980s, the infamous drug lord Pablo Escobar used his network of legitimate businesses like construction and transportation to launder millions of dollars in drug money. More recently, the Malaysian 1MDB scandal involved an estimated $4.5 billion being siphoned from a state investment fund through a complex web of transactions and shell companies.
Statistics
According to the United Nations Office on Drugs and Crime, it is estimated that between 2% and 5% of global GDP ($800 billion to $2 trillion) is laundered annually. However, due to the secretive nature of money laundering, the actual amount could be much higher.
