ACCG877 Session 1 2018: Money Laundering Literature Review

This literature review examines the multifaceted issue of money laundering, its connection to financial crime, and the challenges posed by cyber security. The review begins with an introduction to money laundering, defining its stages (placement, layering, and integration) and highlighting its significance. It explores the relationship between money laundering and financial crime, including terrorist financing, fraud, and identity theft. The role of financial institutions, the impact of technology, and the importance of anti-money laundering measures are discussed. The review also addresses the methods used by money launderers, including the use of cryptocurrencies and shell companies, and the efforts of global authorities to combat these illegal activities. The review covers the different stages of money laundering along with the ways in which criminals are involved in financial crimes. The conclusion emphasizes the detrimental effects of money laundering on financial organizations and the need for effective anti-laundering methods and regulations.

Running head: - MONEY LAUNDERING
MONEY LAUNDERING
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Introduction
Money is the main reason that involves a person in any type of criminal activities.
Money laundering is the procedure by which the criminals convert their illegal money into
legal money. Terrorist also depends on the money to perform different terrorist attacks. The
terrorist derives the money from different sources. When the money is converted it lose its
related criminal identity. The different stages which are involved in the procedure of money
laundering are placement, layering and the integration.
Literature Review
Money laundering and Financial Crime
Money Laundering and the financial corruption related to it, is one of the biggest
concern in front of the world leaders. The crime is not only serious at the same time it is a
threat to human rights and the related law. The advancement of the technology serves as one
of the factor to the increase money laundering and financial crime activities. The money
laundering started in the early nineties. Money laundering can be stated as the procedure of
changing or transforming the illegally earned money into legal money in order to eliminate
the track of flowing illegal money. Money laundering is not limited to the financial
transactions which are relevant to the criminal activities, however it relates to all the
transaction which is an outcome of illegal activities. Initially the money laundering was
introduced with the drug trafficking as more of the illegal money comes from selling of
illegal weapons, human trafficking and issues like corruption. The money laundering
comprises of three phase. The phases are named as the placement, layering and integration
phase. The process of money laundering is a serious matter and it is analysed carefully and
systematically. It is stated that the terrorist financing is related to illegal acts. The act of

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providing funding to a particular terrorist group or to an individual terrorist involved in
terrorist activities is also a crime and unlawful act.
Financial Crime Related to Money Laundering
Money laundering and economic crime are interrelated to each other. Money
laundering and financial crime under goes different stages. The stage of the placement refers
to the entry into the legal financial process. The second stage is the layering which provides
link for the initial stages with the final stage. The last stage is the integration which is the
refund stage made to the legitimate economy for the process of extraction .The most popular
money launders are the group of mafia and cartels who are involved with terrorism. The
financial crime can occur in number of ways and the common crimes related to the finance
sector re the funding provided to the terrorist, fraud, counterfeiting and identity theft. The
criminals offering assistance to the terrorist generally use different types of techniques which
are difficult to detect and catch. It is common that these criminals will have connection with
the government and business sectors including the employees of the financial institute,
accountant and the employees of the government sectors. Banking sectors related to the
jurisdictions having regulations that are less effective rules and regulations are the one which
are used by the terrorist group for the process of financial crime. The introduction of Anti
money laundering helps in catching the criminals related to money laundering and economic
crime related to the money laundering. Most of the financial institutes and business
organization are using a software named Compliance, so that they are able to keep an eye on
their users. It can be stated that terrorist financing is a part of the money laundering however
the destination of both the process are different. With the development of the technology the
criminals are coming up with new techniques and tactics. In order to track the criminals the
concerned authorities are also trying their best in developing certain advance technology.
Government created certain agencies providing service to stop the process of money

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laundering. In 1995, a group named Egmont Group of Financial Intelligence Unit providing a
worldwide link of 106 intelligence units to protest and fight against the money laundering and
economic crime.
Money laundering and cyber security
The method of money laundering depend on the banking system. Nowadays the
organization are facing number of challenges related to the cyber security. The process of
cyber security is a complex problems. The framework related to the cyber security helps in
the process of anti-laundering system. The first stage in creating a cyber-program involves
the identification of all the related stack holders and the organizations.
The money launders use various techniques of money laundering in order to make
illegal funds. The method of crypto currencies and the process of online banking has helped
the criminal in transferring the money and also in withdrawing the money. The prevention of
the process of money laundering has become a distress for the global authority and they are
providing all the assistance to stop the criminals from providing funds to the terrorist. The
objective of the money launderer is to create different layers. The transaction of the illegal
money undergoes various layers. The money passes under through various authorities and
levels. The money laundering mostly deals with the process of the cash transaction. It also
deals with the bank accounts having large amount of deposits. The common method of
money laundering is known as smurfing. Money laundering varies from simple to complex.
Criminals requires certain method in order to transfer their unlawful money into lawful
money. The laundering aims in making the process of transaction difficult so that nobody is
able to recognize the original party related to the transaction. Money laundering uses the
process of shell companies. However, it can be determined that the money laundering is the
process which helps to cover illegal funds.

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Conclusion
Money laundering is the illegal process of transferring money. Money laundering is a
threat to the appropriate working of a financial organisation. Money laundering is a big issue
in all the organization. It is observed that billions of dollars of money are laundered every
year with the help of financial institute. The money laundering can be prevented with the help
of anti-laundering methods involving different types of software. Different laws are
implemented to monitor the money laundering transaction.

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Bibliography
Ferwerda, J. (2013). The effects of money laundering. Research handbook on money
laundering, 35.
Groot, L. (2013). Money laundering, drugs and prostitution as victimless crimes. Research
Handbook on Money Laundering, 57.
Omar, N., Johari, Z. A., & Arshad, R. (2014). Money laundering–FATF special
recommendation VIII: A review of evaluation reports. Procedia-Social and Behavioral
Sciences, 145, 211-225.
Reuter, P. (2013). 18. Are estimates of the volume of money laundering either feasible or
useful?. Research handbook on money laundering, 224.
Unger, B. (2013). Money laundering regulation: from Al Capone to Al Qaeda. Research
handbook on money laundering, 19-32.
Zolkaflil, S., Omar, N., Abdullah, W. N. H., & Nazri, S. N. F. S. M. (2015). A review on
compliance rating: FATF special recommendation IX cross border declaration or
disclosure. Procedia Economics and Finance, 31, 535-550.