Good day Jimi,
I am writing a series of short articles to educate Nigerians on Anti-Money Laundering (AML) and Combating the financing of terrorism (CFT.)
As we are a high risk country for money laundering, the series will teach Nigerians how to identify money laundering red flags. There will also be articles on terrorist financing. We have all been affected by Boko Haram.
I will explain global and national laws, regulations and efforts on AML/CFT.
Currently, only staff of banks and financial institutions are mandated to receive AML/CFT training. These articles will explain how funds from criminal activities end up in the bank accounts of individuals. It will also explain how terrorists like Boko Haram are funded.
Attached is the first article, which I will like you to publish on your blog. I intend to write every two weeks for six months.
Regards,
Chukwudinma Okafor
What is Money Laundering?
Money laundering is the process of making money obtained from illegitimate means appear to have been earned legally. It can also be defined as the conversion of criminal (dirty) money to legitimate (clean) money. Before money laundering can take place, an offence must have been committed. Offences and criminal activities that generate funds that need to be laundered are called predicate offences.
Predicate offences include:
Armed robbery
Prostitution
Insider trading
Tax evasion
Kidnapping
Oil bunkering
Drug trafficking
Embezzlement and fraud
Bribery and corruption
Human trafficking
Forgery
Smuggling
Murder/Assassination
Currency counterfeiting
Illegal trade in stolen goods
Illegal trade in fire arms.
Persons who commit any of these offences need to hide the real source of their money. This is for them to look like responsible individuals in society.
Stages in money laundering
There are three stages of money laundering. Placement, Layering and Integration.
Placement is when the funds are introduced to the financial system or economy. This can be via cash deposits, purchase of goods or high value items, purchase of money orders, purchase of prepaid cards, etc. This is the easiest stage to detect money laundering.
Layering involves series of complex transactions. This is usually via business transactions and wire transfers. The purpose is to hide the real source of funds. It also creates several money trails to confuse investigators.
Integration is the final stage. Here, it’s very difficult to detect money laundering. It usually involves purchase of assets which can now generate legitimate funds for the beneficiary. For example, a property may generate rental income, which may be further mixed with more proceeds of crime.
To combat money laundering the government, law enforcement agencies, financial institutions and designated non-financial businesses and professions play a key role. Although money laundering cannot be stopped, it is important that society is aware of it, and that all play active roles in anti-money laundering. This will make the economy better, and make it more difficult for criminals to launder their funds.
END
Thank you Jimi for publishing this. I’ll send the next article shortly.