It is often hard for criminals to openly use the funds gained from criminal activities, especially if they are carrying out monetary transactions where they can be questioned as to where the money came from. Tax avoidance may also be an issue here.
So that criminals can use the proceeds of illegal activities or undeclared income without their original source being detected, they will resort to money laundering. The process will also attempt to make the funds appear perfectly ‘clean’ with an apparently legitimate reason for their existence.
Placing the proceeds of any criminal activity back into the economy will always be considered money laundering – no matter the value.
But there are also instances where money that starts out as “clean” or respectable, becomes dirty, because of how it is used. For example, any money or assets that are used for the purpose of funding terrorism will be viewed as “dirty” by the counter terrorist financing regimes.
Crimes associated with money laundering include drug trafficking and terrorism but the illegal proceeds could be from any activities. There are several forms of money laundering and it is an international problem which can affect all industries.
So, how does this affect you?
You may be subject to criminal sanctions if you knowingly facilitate a transaction involving dirty money. You may even find yourself in trouble if you do so unknowingly, if there were reasons to be suspicious, and you did not recognise and report them.
This may result in fines and even imprisonment. It is also likely to cause significant reputational damage to both yourself and your organisation.