Money Laundering: Most Effective Combat Strategies Essay

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Updated: Dec 25th, 2023

Money laundering refers to acts, whereby, criminals mask the nature of their illegal activities, sources of their finances, and proceeds of their activities. Money laundering corrupts the integrity of the whole financial system of a country (MacQueen, 1993). Participants of money laundering activities strive to establish legitimate reasons to conduct their illegal businesses.

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Criminals, who deal in money laundering, conduct their transactions in least suspicious ways to hide from authorities such as, the government and business administration bodies that control money laundering. The practice of money laundering is widespread all over the globe. It is rampant in countries with loose anti laundering programs and in countries that have inefficient mechanism to detect money laundering.

The practice of money laundering affects the economy and security of a country (MacQueen, 1993). There have been increases in implications brought by money laundering, internationally. This calls immediate intervention from the mandated bodies, in the relevant countries.

The government of United States of America approximates losses 60 billion U.S dollars, annually. One of the main routes adopted for money laundering is through sale of drugs. Since sale and consumption of drugs is illegal in most of the countries, different innovative ideas are used to reach the prospective customers.

The same applies to ways adopted by money launderers. There are various techniques that are adopted (Module 8, slide 3). The money from the sales is transferred illegally. It is estimated that the drug trade is worth US$322 billion annually (Module 6, slide 2). Money laundering should be controlled; otherwise, economic progress may not be realized as quickly as projected.

Strategies Used to Combat Money Laundering

The increased concerns about the adverse effects of money laundering led to precautionary and combative measures to be developed, in various countries. Countries have directed their efforts to curb money laundering to control the downwards projections of their countries’ economies. Countries are also aware of the security challenges posed by money laundering. As a result, countries have joined regional blocks such as the E.U to enjoy platforms laid down to control money laundering.

Nations hope to do away with money laundering by applying their own strategies and those from regional blocks (MacQueen, 1993). Canada adopted a unique strategy to curb the use of drugs and indirectly minimize money laundering. The Canadian government decriminalized the use of drugs but kept it illegal (Module 6, slide 29). So gradually the use of drugs is expected to decrease. This will definitely have a positive impact on the financial figures of the country.

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Another method that the Canadian government adopted to curb money laundering was to open dummy exchange office that allowed drug traffickers to deposit money in order to legalize it. Many drug traffickers were attracted to deposit huge amounts of illegal money. Almost US$165 million were collected through this (Module 7, slide 19). According to some scholars, the best way to demoralize money launderers is to freeze their valuable assets (Module 9, slide 7).

Effectiveness of the Strategies Applied to Combat Money Laundering

Several countries such as Canada have adopted legislative programs that have initiated strategies to combat money laundering. These programs aim to tackle money laundering issues at the basics. The legislative programs established have aimed at, evaluating and monitoring suspected illegal accrual of wealth.

The programs have provided a ground to report doubtful money or assets, held by various individuals. Changing times and technologies have made it possible to conceal of vital information on illicit wealth in a way that cannot be traced easily. Most countries have high levels of corrupt legislative officers, across the globe. Corrupts individuals manipulates money laundering corrupt officers through bribes, who allows money laundering activities to proceed.

The US government has set up a legislative control act (The Money Laundering Control Act), which encourage suspected people to report and justify the acquisition of their wealth, or to face charges amounting up to 3000 U.S dollars. On the other hand, Canada has established a national initiative to tackle money laundering cases.

The initiative has strategized ways to spot and limit the financing of terrorist activities in the country. The contents of the strategy: include provision of a background for in depth investigation of money laundering cases, and ruthless prosecution of money laundering offences (Stephen, 2004).

The United Nations (UN) has implemented anti terrorism measures. The Security Council, a wing of the United Nations, commissioned a set of sanctions against persons associated with money laundering. The sanctions intend to freeze all assets these individuals have, and also ban them to travel to other countries. The United Nations together with bodies set up by different countries have stepped up their efforts, and realized considerable results in curbing money laundering cases.

The Croatian government reported a 40% decrease in losses that arose from money laundering. Following this incidence, the government has combined efforts with the U.N to trace terrorism financing roots. This strategy has covered a considerable ground and has reduced money laundering activities by 12%, in 2012. The strategy has also realized massive gains with regard to the high number of money laundering cases reported, in Croatia (David, 2009).

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The Most Effective Strategies of Money Laundering Control

Supervisory authorities have played the most significant role to curb money laundering. The inclusion of financial institutions such as, banks and insurance supervisors in the monitoring of monetary transactions have helped, countries, significantly to get the sources and destinations of finances that have been involved in money laundering activities (Gilmore, 1999).

Financial institutions supervisors have helped to trace the locations of the participants of money laundering, and bring them for prosecution. Financial institution strategy has complemented the other strategies to curb money laundering. Financial institutions help to detect terrorists financing agents, and provide data for the legislative bodies to take actions.

Financial institutions strategy is the most effective way of controlling money laundering, and thus demands undivided attention. However, the effectiveness of this strategy is not guaranteed if authorities do not take actions. The strategy is also subject to manipulation by influential participants in money laundering. Money laundering is an illegal activity that engages in transactions that revolve around several countries.

This fact calls for cooperation among countries. Cooperation should facilitate the exchange of information that is useful in anti money laundering campaign (Gilmore, 1999). In addition, established bodies such as the United Nations should provide a common ground to promote cooperation among countries.

Combined efforts provided by other bodies and treaties such as, the Mutual Legal Assistance Treaty, have helped significantly to step up anti laundering campaigns, in various member countries. Other countries are undertaking zonal participation, in curbing the menace, as a result of the alarming cases, and more awareness created by U.N conventions.

Therefore, governments should step up their fight against money laundering. They should enhance cooperation among financial institutions, in order for them to access the necessary information from suspected money laundering individuals, and thus control money laundering activities to the minimum level possible.

References

David, C., & Sharman, J. (2009). Corruption and Money Laundering: A Symbiotic Relationship. Palgrave: Macmillan.

Gilmore, W. C. (1999). Dirty Money: The Evolution of Money Laundering Counter-measures. Strasbourg: Council of Europe Pub.

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MacQueen, H. L., & David Hume Institute. (1993). Money Laundering. Edinburgh: Edinburgh University Press.

Module 6. (n.d.). The Drug Trade – Study Materials (Slides 2 & 29). Retrieved from: file:///C:/Users/admin/Downloads/eConcordia%20-%20Governance%20and%20Organized%20Crime%20-%20Module%206-%20The%20Drug%20Trade%20(Print%20Version).html

Module 7. (n.d.). Law Enforcement Strategies – Study Materials (Slide 19). Retrieved from: file:///C:/Users/admin/Downloads/eConcordia%20-%20Governance%20and%20Organized%20Crime%20-%20Module%207-%20Law%20Enforcement%20Strategies%20(Print%20Version).html

Module 8. (n.d.). Money Laundering – Study Materials (Slide 3). Retrieved from: file:///C:/Users/admin/Downloads/eConcordia%20-%20Governance%20and%20Organized%20Crime%20-%20Module%208-%20Money%20Laundering%20(Print%20Version).html

Module 9. (n.d.). Combating Money Laundering – Study Materials (Slide 7). Retrieved from: file:///C:/Users/admin/Downloads/eConcordia%20-%20Governance%20and%20Organized%20Crime%20-%20Module%209%253a%20Combating%20Money%20Laundering%20(Print%20Version).html

Stephen, S. (2004). Money Laundering in Canada: An Analysis of RCMP Cases. Nathanson Centre for the Study of Organized Crime and Corruption. New York: York University.

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