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What is money laundering?

By Milena Radoman
According to legend, money laundering was conceived by the 1920s Chicago mafia with Al Capone.
The famous gangster used laundries to recycle illegally acquired money...

The phenomenon is difficult to assess but, Stage One: placement sending funds from blockchain to blockchain;
according to the United Nations Office on This involves introducing «dirty money» combining or mixing, depositing of trust
Drugs and Crime (UNODC), money laundering into the financial system by breaking large monies from a bank; and buying and selling
operations represent between 2 and 5% of sums into many smaller amounts which are cryptocurrencies and then depositing the
global GDP, or nearly $2,000 billion. Currently deposited directly into a bank account or used proceeds in another bank or account. Anti-
at the top of illicit trade, traditional drug to purchase monetary instruments such as money laundering professionals advise setting
trafficking is the source of almost half of cheques or money orders which are collected up AML programmes to monitor certain
the total crime turnover in the world. and deposited elsewhere. The methods vary: telltale signs and red flags, such as frequent
Money laundering, punishable by articles 218 false invoices; “smurfing”, when criminals transactions that end in rounded amounts,
and 219 of the Monégasque Penal Code, is split large sums of cash into several small deposits of money into accounts that are then
the act of concealing the origin of illegally transactions, distributed amongst several quickly withdrawn, frequent transfers between
acquired money to give it a legitimate operators or account holders; and concealing different accounts within the same institution,
appearance with a view to reinvesting it. the identity of the beneficiary through trusts frequent transfers to and from accounts, the
It allows criminals to get rich by financing and offshore companies etc. destination and provenance of funds to or
illegal activities, such as arms and drug from risky countries or accounts.
sales, smuggling, embezzlement, insider Stage Two: stacking funds
trading or even corruption and fraudulent Money passes through a series of financial Stage Three: integration into the financial
operations. “Some are very simplistic, transactions in order to complicate the system
even childish (false gambling winnings, identification of its origin. This can take the When integrating money laundering, the
fake invoices etc). Others require a truly form of purchases/sales of investments, launderer attempts to inject the illicitly
international organisation rivalling the through a holding company, or transfers obtained funds back into the legitimate
world’s largest conglomerates (acquisition of through a series of accounts domiciled financial system, with real estate, luxury goods
companies, use of swaps, passage through in banks located in countries that do not or joint ventures... They often just use payroll
international clearing houses etc)” explains cooperate with AML investigations. The key is and other taxes to make the laundering seem
the specialist, Eric Vernier, in his book, to appear legitimate by disguising the transfers more legal, accepting to lose 50% of their gains,
Money Laundering Techniques And Means as payments for goods or services, or as a considered the price of doing business. Typical
Of Combating Them (Dunod). private loan to another company. Criminals integration tactics include: fake employees – a
are now also using cryptocurrencies, alongside means of recovering money usually paid in
The circulation of laundered funds in the the traditional financial system, to disguise the cash and collected; loans – to managers or
legal financial system is carried out in origin of funds. Amongst the stacking tactics shareholders and which will never be repaid;
three stages. to be wary of are: chain-hopping - successive and dividends – paid to shareholders of
conversions into different cryptocurrencies by companies controlled by criminals.

Paiement par Y d’une
CYCLE DU BLANCHIMENT D’ARGENT fausse facture à la société X
3
MONEY LAUNDERING CYCLE Payment by Y of a
2 Prêt à la société Y false invoice to company X
Loan to company Y

Collecte d’argent sale PLACEMENT Intégration de l’argent sale EMPILAGE 1 Transfert sur le compte INTÉGRATION Achat de produits de luxe,
Collecting dirty money dans le système financier bancaire de la société X investissements financiers,
Integration of dirty money Transfer to the bank commerciaux, industriels
into the financial system account of company X Purchase of luxury products,
financial, commercial,
industrial investments

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