The regulations do however contain transaction provision stating that persons providing legal services will not be required to maintain identification procedures in respect of any business relationship formed by him before the regulations have came into force. Methods and Process of money laundering: Methods of money laundering have been considered as follows: smuggling cash, the use of casinos, prostitution, the use of named companies merely as fronts, false banks, underground banking, Money Exchange, false invoicing, buying/selling goods, debt factoring and Bills of Exchange under s27 (2) of NAME Act of 1882 amongst others.
However, money laundering occurs outside of the normal range of economic statistics and situations. It is not a single act but is in fact a process that is accomplished in three basic steps. These steps can be taken at the same time in the course of a single transaction, but they can also appear in separable forms one by one as well. The steps4 are: Placement; Layering; and Integration Organized crime groups all over the world will generate large sums of money through their illegal practices such as drug trafficking, arms dealing and other financial crimes. This money is often termed dirty money. In order for this money to be use to the criminal groups it must be legitimized.
The process of doing this is known as money laundering. There are three main stages to the process of money laundering.Firstly, the money must be taken away from where the crime to obtain it has occurred and be put into the financial system. This could be done by putting the money into a bank, and is called the placement phase. Secondly comes the layering stage where the money is disguised inside the financial system through money transfers. The final stage where is integration, and involves the money being missed with legitimate funds that then allows the criminal group access to the funds.
The most usual ways for laundering are those where large quantities of cash or liquid investments of assets are handled. In the financial markets, banks and investment companies are the most heavily used. In the commercial fields use is made of businesses dealing in expensive goods that can prove popular as they give a chance for moving money around by dealing in those expensive goods, often between countries.
Another development, and one that has become more heavily done as banks and other financial businesses have attempted to tighten their anti money laundering operations, is to include a firm of solicitors, accountants or other professionals in what appears to be an ok scheme to invest or transact money. This provides the attraction of feeding money through a professional's client account to make much less visible the arrangement with a cloak of respectability. It seems unlikely that many professional firms would take such a risk. A particular problem in spotting laundering is that most of those with large amounts of money to launder are clever enough to avoid it looking suspicious.
The increasing integration of the world's financial systems and the reduction of barriers to the free movement of goods and capital mean that launderers can make use of these systems to conceal illicit wealth. Some of the international interventions include: the Basle Committee on Banking on Banking Regulations and Supervisory Practice; United Nations[UN] Convention against Illicit Trafficking in Narcotic Drugs and Psychotropic Substances; Convention on laundering,search,seizure and confiscation of the proceeds from crime and the first Money Laundering Directive. Whilst there is extensive legislation and regulations regarding money laundering, there remain accusations that money laundering is taking place on a fairly large scale.
The law, in U.K is mainly found in the Proceeds of Crime Act 2002, which created three principal laundering offences in sections 327, 328, 329.These sections combine and replace the previous law which dealt with laundering the proceeds of crime and drug money laundering in the Criminal Justice Act 1988 and The Drug Trafficking Act 1994 respectively. In addition there are two other statutes, the Terrorism Act 1992 Anti-terrorism, Crime and Security Act 2001,which together with the Terrorism[United Nations]Order 2001 [SI NO 3365] determine the position with relation to funds that are suspected of being used to further the ends of terrorism. The money laundering Regulations 1993[SI No 1993] (as amended) remain in force.
Having such international legislation and regulations can pose a threat to money launderers as the more uniform international legislation becomes, and the more cooperation there is between international jurisdictions, the easier it will be both to track down the source of illegal money and to prosecute the perpetrators. Having such international legislation and regulations can pose a threat to money launderers as the more uniform international legislation becomes, and the more cooperation there is between international jurisdictions, the easier it will be both to track down the source of illegal money and to prosecute the perpetrators.
Anti-Money Laundering Legislations (U.K.)
It was previously thought that the legislation that sought to prevent money laundering of the proceeds of criminal activity was too limited in its scope. It was aimed at the regulation of professionals in the financial and investment sector. It has long since been recognised that those involved in criminal conduct were sophisticated in finding a wider range of business and professional activities that were vulnerable to being used in order to legitimise proceeds from criminal activity. Those businesses/professionals were seen as more vulnerable because they were not trained /regulated in systems designed to prevent the use of their services to launder the proceeds of crime.