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Money laundering affects you!

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28.JAN.11
by the Financial Intelligence Unit

What is Money Laundering?

Money Laundering is a nefarious crime that has the potential of causing an upsurge in negative social ills, thereby interrupting the peaceful climate of Saint Vincent and the Grenadines by acts of violence and wanton disregard for the law.{{more}}

Money laundering is the act or attempt to disguise the source of money or assets derived from criminal activities. Criminal Conduct includes illegal arms trafficking, drug trafficking, theft, robbery, bribery, fraud, gambling, smuggling, amongst others. It is important to them that these illicit funds go unrecognized by law enforcement. Therefore, money launderers tend to operate secretly.

Who launders money?

The simplistic answer to this question is that criminals launder money. However, that answer is far too simple to be completely true. The fact remains that any person can commit the crime of money laundering, as it has no particular face and or identity. It is to be borne in mind that anyone who helps a criminal to launder the proceeds of his crime is also a money launderer. This means bankers, lawyers, accountants, car dealers and others are money launderers, if they allow their businesses to be used by someone else to launder the proceeds of a crime. Generally, the only defense is that the businessman was unaware of what was happening.

In many instances, people other than the businessmen and the criminals themselves can become money launderers either by having possession of the proceeds of a crime or assets that represent the proceeds of crime. The most striking example of this is the wife or girl-friend of a criminal who knows or suspects that her husband or boyfriend uses proceeds of criminal conduct to buy their homes, cars or even jewellery.

The final class of money launderer is the person who helps to create the scheme, even if he does not actually take part in it. So an accountant who recommends a tax evasion or tax avoidance scheme is himself a money launderer.

The Proceeds of Crime and Money Laundering Act 2001 has been implemented in order to offer some guidance to all regulated entities who deal in valued goods and services within the systems that require the identification of customers in many cases. This means that all regulated entities have an obligation to train their staff in relevant law and measures to detect and deter money laundering.

Why do people launder money?

Criminals commit three basic types of crime, namely crimes of passion or honour, crimes of violence or vandalism and economic crimes. The main intent of those persons who commit economic crimes is to achieve financial gains from their illegal acts. Criminals often think they can make more money from their crime rather than a legitimate endeavour.

Criminals use the money they make from their crime mainly to invest in another crime and to hide with the intention of spending immediately or at a later date. One of the most tried, tested and successful methods of investigating economic crime is to follow the money. Therefore, criminals want to move the money further and faster into a “black hole that investigators cannot follow it. Due to the plethora of legislation that was passed to combat money laundering, the criminals need to get the money out of the “black hole” in such a way that the source can be explained. Therefore, they may use the money to purchase significant amounts of assets such as vehicles, boats or real estate; they may set up a “sham” business in order to disguise their illicit gains or may simply put their money into a financial institution under the name of a third party, whether that person is a relative of friend. All these methods are used by the money launderers, not only to disguise the source of the money, but to distance themselves from it, making the money difficult to trace back to them and their criminal conduct.

Why does money laundering matter?

In economic crime such as money laundering, increasingly, there is no physical representation of the crime. The money is no more than information on a computer screen, or to be more precise, it is bits and bytes stored in a computer’s memory. Economic crime affects everyone. Some people claim it is a victimless crime. It is not. You are the Victim.

Money launderers can impact our country by reducing tax revenues through underground economies, competing unfairly with legitimate businesses which means a combination of less profit and higher prices to consumers, damaging financial systems, and disrupting economic development. Money laundering is now being viewed as a central dilemma in dealing with all forms of international organized crime, because financial gain means power.

This power that is gained by money launderers can be used to engage in further criminal activities such as drug trafficking, murders, kidnapping, corruption and bribery of officials. Increase in crime will put a drain on our economic and social resources, which will impact on everyone, including law abiding citizens.

Money laundering is not a victimless crime.

The negative reputation that results from these money laundering activities diminishes legitimate global opportunities and sustainable growth while attracting international criminal organizations, with undesirable reputations and short-term goals. This can result in diminished development and economic growth. Furthermore, once a country’s financial reputation is damaged, reviving it is very difficult and requires significant government resources to rectify a problem that could be prevented with proper anti-money laundering controls. Hence the reason the Financial Intelligence Unit is making you aware of the threats posed by these nefarious elements and the crimes in which they engage. We must ensure that our country’s reputation, which we have built over the past years of being a safe place for investment, remains intact. We cannot afford to allow the so obvious threats of money launderers to go unheeded. Fighting money launderers not only reduces financial crime, but it also deprives criminals of the means to commit other serious crimes. Let’s work together to combat these crimes.

Visit us at www.svgfiu.com for related articles and more information on money laundering.

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