Financial Services & Tax Laws

Question 1

Money laundering

Answer 1

process of making large amounts of money generated by a criminal activity, such as drug trafficking or terrorist funding, appear to have come from a legitimate source. The money from the criminal activity is considered dirty, and the process “launders” it to make it look clean.

Question 2

What are the three stages of money laundering

Answer 2

1. Placement
2. Layering
3. Integration

Question 3

Placement (stage 1) in money laundering

Answer 3

dirty money (proceeds of crime) put into bank account

Question 4

Layering (stage 2) in money laundering

Answer 4

money is actually “laundered”. Attempt to separate money from its original, illegal source. Done by moving the money quickly and to different areas, creating complex ‘layers’ of transactions and transferring so money is transformed and not detected through audits.

Ex: money in the account is transferred to other bank accounts (some maybe abroad) disguised as business transactions eg goods and services. Route money takes is complex to make difficult to trace its origin.

Question 5

Integration (stage 3) of money laundering

Answer 5

Making the money appear like its legit. Done by putting it back into the economy by looking like money comes from legit source. Ex: buying a Bar and declaring money from a crime to be profits from the Bar and even paying taxes on them.