What is money laundering?

 

What is money laundering?

The aim of many criminal acts, particularly those linked to organised crime, is to generate profit. Money laundering is the processing of this profit to disguise its illegal origins and to enjoy the financial benefits of their offending.

There are three stages involved in money laundering and these are: –

1. Placement:The introducing of illegal funds into the financial and business system (for example the proceeds of sale of cannabis is deposited into a business bank account and these are co-mingled with business takings or using it to purchase assets);
2. Layering: The movement of funds via a series of transactions so as to disguise the origin of the funds and obscure the audit trail (for example using a network of complex transactions involving multiple banks or accounts, companies and trusts); and
3. Integration: The introduction of laundered funds into the legitimate economy through ordinary financial activities. At this stage, the funds or assets appear to have been legitimately acquired.

What is terrorism financing

Terrorism financing is the process by which terrorists and their sympathisers raise and move funds to conduct terrorist acts and operations. Like money laundering, terrorism financing is generally described as having three stages:

1. Raising funds:Terrorism financers raise funds through legitimate earning, donations and/or criminal offending;
2. Transferring funds:Once the funds have been raised, funds for terrorist causes need to be moved to the place where they will be used, which often requires funds to be moved internationally. This can be done by physically couriering cash or high value commodities or moving funds through the international financial system,

3. Use: Terrorist groups use the funds either to commit terrorist acts or to fund ongoing operations. Any use of the funds by a terrorist group to support the organisation and its cause is terrorism financing.

If you have any specific questions about our Anti-Money Laundering and Counter Financing of Terrorism procedures and what these will mean for you, please contact or our AML Compliance Officer: 

we***@ma*********.nz