What is money laundering?
Home > Basics > Swiss bank secrecy > Money laundering > Definition Money laundering is a process whereby the origin of funds generated by illegal means is concealed (drug trafficking, gun smuggling, corruption, etc.). The objective of the operation, which usually takes places in several stages, consists in making the capital and assets that are illegally gained seem as though they are derived from a legitimate source, and inserting them into economic circulation. Money laundering is not a new phenomenon: it’s as old as crime itself. Criminals have always endeavored to conceal the origin of illegally generated funds in order to erase all trace of their wrongdoings. Nevertheless, the forms and dimensions of this type of crime have evolved in recent years. Since the seventies, the escalation of the drug market and globalization of organized crime have led to a collective raised awareness with regard to the problem of money laundering. Due to its stability, the quality of services offered
Money laundering is the legitimization of proceeds from any illegal activity. Illicit proceeds of crimes must be introduced (laundered) into the worlds legitimate financial systems. Criminal organizations transform illicit monetary proceeds into funds derived from an apparent legal source. Three primary stages of money laundering are: • Placement of illegal funds into financial systems; • Layering funds through a series of mechanisms, such as wire transfers, designed to complicate the paper trail; • Integrating the laundered funds back into the legitimate economy through the purchase of real estate, businesses and other investments.
The laundering of the proceeds of crime (or money laundering) is the process whereby ‘dirty money’, produced through criminal activity, is transformed into ‘clean money’ whose criminal origin is difficult to trace. Criminals do this by disguising the sources, changing the form, or moving the funds to a place where they are less likely to attract attention.
The goal of a large number of criminal acts is to generate a profit for the individual or group that carries out the act. Money laundering is the processing of these criminal proceeds to disguise their illegal origin. This process is of critical importance, as it enables the criminal to enjoy these profits without jeopardising their source. Illegal arms sales, smuggling, and the activities of organised crime, including for example drug trafficking and prostitution rings, can generate huge amounts of proceeds. Embezzlement, insider trading, bribery and computer fraud schemes can also produce large profits and create the incentive to “legitimise” the ill-gotten gains through money laundering. When a criminal activity generates substantial profits, the individual or group involved must find a way to control the funds without attracting attention to the underlying activity or the persons involved. Criminals do this by disguising the sources, changing the form, or moving the funds to a plac
