Money Laundering

As of yet, I don't have any personal experience in this matter, so this is not an explanation of how to be a money launderer, but an explanation of what money laundering is and how money launderers may go about it:

What is it?

- Money laundering is defined by the FCA as taking the proceeds of crime and turning it into legitimate funds, or in other words, you take money from an illegal venture of some form and turn it into money you can get away with using. In short, you're separating the crime from the money.

The three stages of money laundering:

1. Placing:

- This is the part of the deal where criminals get hold of their money - i.e. collecting your money from weapons sale or drugs deal.

- Generally, this is where most people are likely to get caught out.

2. Layering:

- This stage is all about blurring the picture to make it hard and the objective of this stage is to get rid of the crime associated money and get new money back.

- Normally, this will involve putting the money through multiple bank accounts and via a complicated  network of contacts in order to make it very difficult for the authorities to trace it.

- It's quite common for money launderers to target builders merchants, because they usually have cash flow issues. For example, Dodgy Dave comes to you and offers to give you a million pounds at a very low interest rate, but with the provision that he may have to call it in early. Six months later he then does, but he writes off part of the debt that the builder has tied up in other projects. 

This still works out profitable for the money launderer, because the margins from crime related business are so huge that it doesn't matter if they lose quarter of the profit in ensuring that it has been layered properly.

3. Integration: 

- The final part of the three step process is all about spending your new crime-disaccociated cash on a new house or a Ferrari, etc.

How big a problem is it?

One of the issues with all forms of crime is that criminals don't have their own bureau of statistics we can look through to work out how big a problem money laundering is, but estimates value the money laundered through the UK at £48 billion per year (about 2% of the UK's GDP).

Why does it matter? 

- Most people probably never think that they're never going to pick being a money launderer as a career and consequently don't think it matters to be knowledgable on the subject, but there are some pretty serious consequences for not being aware of the rules:

1. Fourteen years in prison for being a money launderer - a lot for financial crime. 

2. Five years in prison for not declaring that you know a money launderer. 

3. Five years in prison for tipping off a money launderer.

I suppose to conclude here, the only thing I can really say is don't get caught being a money launderer or being associated with a money launderer.