This article will address what is money laundering with example. The actions that are performed in order to gain and then scatter the illicit funds to disguise their origins are known as money laundering. To comprehend the idea behind money laundering,
Let’s take a hypothetical example of an individual who tends to engage in theft and later creates an account in a bank with the intention to launder the stolen funds at the same time by using it.
Although this may be considered a simple type of money laundering scheme in which the stolen funds are released from their illegal use, there are many more ways in this modern world as of now.
What is Money Laundering with Example?
Money laundering is a way to purify the money by scattering it into different accounts or purchasing legal assets that ultimately disguise the origins of payments.
Money Laundering Examples
Some of the most popular examples of money laundering are mentioned below:
- The Mirror Trading Scandal
To understand what is money laundering with example, the mirror trading scandal is the best illustration. The Mirror Trading Scandal revealed how Russian impostors and billionaires managed to launder money with the help of Deutsche Bank by using a misleading tactic known as mirror trading.
Scammers made a proper plan, took assistance from the international banking system, and later took advantage of stock market susceptibilities in order to transfer money throughout the world in such instances. That’s one of the biggest examples of money laundering in the history.
How Does it Work?
In Russia, impostors opened multiple accounts. They opened them in different jurisdictions in order to perform mirror trades, which mainly include the purchase of shares in only one market and concurrently selling an equal number of shares in another market at somewhat different prices to gain profit. Large quantities of money were frequently exchanged in such transactions that consisted of hundreds of millions. Since the purchases and sales seemed authentic in their nature, even though they were really just shifting money about, these transactions were intended to tuck away the overall movement of money. Such a real-life case highlights how regulatory negligence can assist in also circumventing regulatory oversight by taking advantage of the opportunity to swap substantial amounts of rubles into euros or US dollars simply through the international stock markets.
- Money Laundering via Luxury Properties
The famous Vancouver real estate market has become a hub for money laundering, and it consists of organized crime syndicates that further employ luxury residences to launder billions of dollars without any hassle. Real-life cases of such a nature assist in demonstrating how upmarket real estate might be used as an opportunity to clean dirty money simply by inflating the property values and employing anonymous shell companies in order to conceal the source of the funds simultaneously.
How Does it Work?
To make it understandable, what money launderers did is they took the opportunity and assistance from a shell company that assisted them in purchasing luxury houses in Vancouver, which resulted in increasing property values and consequently the laundering of illegal funds through rental and sale proceeds as well.
- The FIFA Corruption Scandal
When it comes to significant events, corruption is the only thing that can be expected at this time, and the same goes for the events of FIFA, where money laundering took place through the sponsorship deals, kickbacks, and bribery by FIFA executives. Opportunity was explicitly utilized by the scammers in order to clean up the dirty money by the enormous cash flow produced through international football events and sponsorships.
How Does it Work?
FIFA executives accepted bribes from the sports marketing companies in return for the different sponsorship agreements, which particularly included World Cup hosting rights and television rights.
Shell corporations, offshore accounts, and tools that had the ability to manipulate financial evidence, like fake invoices and consultancy agreements, were mainly used to transfer the illegal funds across international borders at the same time. Executives of FIFA were specifically able to hide the real source of their funding because of the agreements they made in the first place.
How AML Service Providers Can Fight Money Laundering
There are diverse ways in which businesses can be saved from money launderers; the only thing they need to invest in is to have a perfect AML service provider whose features align with the business’s goals. Businesses working in the digital age need automated solutions that help with timely updates, expert insights, and real-life case studies. All these services keep the businesses more protected and compliant with evolving AML standards.
