Liberalization of economies, globalization and Internet have collectively converted the world into a global village. The developments have created many opportunities but indirectly created many risks also. Money laundering, particularly Cyber money laundering, is on the rise and is threatening societies and some critical sectors like banking. Though practice of money laundering is very old, the use of the term `Money Laundering' is of recent origin. This article discusses the issues of money laundering, the cyber money laundering process, business areas prone to money laundering with specific reference to banking and finally ways and means of prevention.
Money laundering is one form of organized crime. Traditionally, money laundering has been associated with criminal syndicates, drug cartels and individuals making money through unfair and illegal means. The money launderers have made use of weak banks and countries with weak or protected banking system. There are many stories as to how the term `money laundering' was supposed to have originated. According to one, it originated from `Mafia', in the United States. Others say, that because dirty money is put through a number of transactions or washed so that it comes clean, the entire process came to be known as money laundering. Whatever may be the origin, money laundering is the process of converting dirty or illegal money into legal money. Earlier, Swiss banks with their numbered accounts provided perfect opportunity to criminal gangs for this process. In one of the celebrated cases in US, a person named Mayer Lansky introduced an offshore account in a Swiss bank which was used by him and others to stash away illegal earnings of the then governor of Luciana, US, Huey Long. Later, this money was brought back as loans by Lansky to establish businesses in New Orleans. There is ample evidence to support the fact that during the Second World War, many Nazi military officers used Swiss banks to hide the money they plundered in the occupied countries. Though money laundering was in existence from the 1930s, it attracted international attention only during the 1980s, when western countries enacted laws which deprived the drug syndicates to plough back their huge profits from their illicit trade. Money laundering is an international business, around the clock enterprise and a global phenomenon. Conservative estimates put the money involved at US $500 bn annually. Another note worthy factor, according to the United Kingdom's Intelligence reports, is that 60% of this is being contributed by drug cartels. Needless to say, that the criminal syndicates are financially very powerful and they are always on the lookout for better ways and means for money laundering. Though there is no universally accepted definition for money laundering, the definition suggested by United Nations can serve as a guideline. UN defines money laundering as "The conversion or transfer of property knowing that such a property is derived from an offense, for the purpose of concealing or disguising the illicit origin of the property, or of assisting any person who is involved in the commission of such an offense to evade the legal consequences of his actions. In other words, it is the concealment or disguising of the true nature, source, location, deposition, movement rights with respect to or ownership of property, knowing that such property is derived from an offense". |
