Article Author : Nivetha Kumar

MONEY LAUNDERING
Abstract
“Rather fail with honor than succeed by fraud”
Money laundering happens in almost every country in the world, and a single scheme typically involves transferring money through several countries in order to obscure its origins. The rise of global financial markets makes money laundering easier than ever -- countries with bank-secrecy laws are directly connected to countries with bank-reporting laws, making it possible to anonymously deposit "dirty" money in.

Definition
Money laundering, at its simplest, is the act of making money that comes from Source A look like it comes from Source B. In practice, criminals are trying to disguise the origins of money obtained through illegal activities so it looks like it was obtained from legal sources. Otherwise, they can't use the money because it would connect them to the criminal activity, and law-enforcement officials would seize it. The most common types of criminals who need to launder money are drug traffickers, embezzlers, corrupt politicians and public officials and terrorists. Drug traffickers are in serious need of good laundering systems because they deal almost exclusively in cash, which causes all sorts of logistics problem.

Process Involved
The basic money laundering process has three steps:
1. Placement - At this stage, the launderer inserts the dirty money into a legitimate financial institution.
2. Layering - Layering involves sending the money through various financial transactions to change its form and make it difficult to follow.
3. Integration - At the integration stage, the money re-enters the mainstream economy in legitimate-looking form -- it appears to come from a legal transaction.

Conclusion
While increased worldwide efforts are making a small dent in the money-laundering industry, the problem is huge, and the money launderers are winning overall. Countries with bank-secrecy rules, which arguably have legitimate benefits to the honest depositor, make it extremely hard to track money once it's transferred overseas. Still, the FATF's uncooperative list has gone from 15 countries in 2000 to two countries (Myanmar and Nigeria) in 2005. By most accounts, this is a significant sign of progress. Only increased global awareness and cooperation can curb the success of the money-laundering industry.