1. However, the Criminal Justice Act 1993 (to make) the laundering of the proceeds of non-drug trafficking crimes an offence for the first time.
2. It (to be) not until the enactment of the Criminal Justice Act 1995 and the Proceeds of Crime Act 1995 that Scotland (to come) into line with England regarding the extension of money laundering (to cover) all crime proceeds.
3. The biggest source of illicit profits (to come) from the drugs' trade and it (to be) drug trafficking that (to provide) the initial catalyst for concerted international efforts against money laundering.
4. The drugs' industry (to be) a highly cash intensive business and "in the case of cocaine and heroin the physical volume of notes received (to be) much larger than the volume of drugs themselves".
5. The reporting of suspicious transactions not (to limit) to cash in the UK.
6. Transfers to and from the financial system (to be) also under the umbrella of ‘reporting of suspicious transactions’ and this can (to provide) useful information on the ‘layering’ stage of the money laundering process.
7. The keeping of comprehensive transaction records (part of the procedures) by financial organizations (to provide) a useful audit trail and (to give) useful information on people and organizations involved in laundering schemes once discovered.
WRITING
a/ Translate into Ukrainian:
An A-Z of Money Laundering (part 1)
Laundering ill-gotten gains is of necessity a murky business, and even the professionals – on both sides of the fence, legally speaking – spend years to get grips with it. The explosion of interest in how terrorist groups fund their activities has added new concepts and ideas to the mix, muddying the water further.
But don’t make the mistake of thinking that the two are identical. Laundering money and financing terrorism may share some techniques – but they are still very different activities.
On the one hand, money laundering is all about hiding the proceeds of criminal – or at least illegitimate activity. This could be anything: the biggest amounts, probably hundreds of billions of dollars each year, stem from the global narcotics trade, but bank robbers, embezzlers, fraudsters, tax dodgers – not to mention corrupt public servants and politicians – all need some way of making their money look legal when its origin is otherwise.
b/ Explain the reasons: Why money laundering process is so attractive for criminals. (150 words)
SECTION 2:
PROCESS AND METHODS OF MONEY
LAUNDERING
Before you read
Discuss these questions:
1. What are ways of money laundering?
2. What do you know about the process and methods of money laundering?
Key vocabulary:
To be accomplished, placement, layering, integration, to conceal, to maintain,
to shrink, to be smuggled out, the location of acquisition, asset forms, concealment, audit trail, to disassociate, offshore bank, shell companies, wire transfers, stock, anonymity, to be assimilated with, to verify, ‘off the shelf banks,.
Loan.
Read and translate the text:
MONEY LAUNDERING PROCESS
Money laundering is not a single act but is in fact a process that is accomplished in three basic steps. These steps can be taken at the same time in the course of a single transaction, but they can also appear in well separable forms one by one as well. The steps are: placement; layering; and integration.
There are also common factors regarding the wide range of methods used by money launderers when they attempt to launder their criminal proceeds. Three common factors identified in laundering operations are;
- the need to conceal the origin and true ownership of the proceeds;
- the need to maintain control of the proceeds;
- the need to change the form of the proceeds in order to shrink the huge volumes of cash generated by the initial criminal activity.
Stages of the Process
PLACEMENT
This is the first stage in the washing cycle. Money laundering is a "cash-intensive" business, generating vast amounts of cash from illegal activities (for example, street dealing of drugs where payment takes the form of cash in small denominations). The monies are placed into the financial system or retail economy or are smuggled out of the country. The aims of the launderer are to remove the cash from the location of acquisition so as to avoid detection from the authorities and to then transform it into other asset forms; for example: travelers cheques, postal orders, etc. (more details follow).
LAYERING
In the course of layering, there is the first attempt at concealment or disguise of the source of the ownership of the funds by creating complex layers of financial transactions designed to disguise the audit trail and provide anonymity. The purpose of layering is to disassociate the illegal money from the source of the crime by purposely creating a complex web of financial transactions aimed at concealing any audit trail as well as the source and ownership of funds.
Typically, layers are created by moving the monies in and out of the offshore bank accounts of bearer share shell companies through electronic funds' transfer (EFT). Given that there are over 500,000 wire transfers - representing in excess of $1 trillion - electronically circling the globe daily, most of which is legitimate, there isn’t enough information disclosed on any single wire transfer to know how clean or dirty the money is, therefore providing an excellent way for launderers to move their dirty money. Other forms used by launderers are complex dealings with stock, commodity and futures brokers. Given the sheer volume of daily transactions, and the high degree of anonymity available, the chances of transactions being traced is insignificant.
INTEGRATION
The final stage in the process. It is the stage at which money is integrated into the legitimate economic and financial system and is assimilated with all other assets in the system. Integration of the "cleaned" money into the economy is accomplished by the launderer making it appear to have been legally earned. By this stage, it is exceedingly difficult to distinguish legal and illegal wealth.
Methods popular to money launderers at this stage of the game are:
a. the establishment of anonymous companies in countries where the right to secrecy is guaranteed. They are then able to grant themselves loans out of the laundered money in the course of a future legal transaction. Furthermore, to increase their profits, they will also claim tax relief on the loan repayments and charge themselves interest on the loan.
b. the sending of false export-import invoices overvaluing goods allows the launderer to move money from one company to another with the invoices serving to verify the origin of the monies placed with financial institutions.
c. a simpler method is to transfer the money to a legitimate bank from a bank owned by the launderers, as ‘off the shelf banks’ are easily purchased in many tax havens.
Reading check exercises
