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What is Money Laundering?

What is Money Laundering | Singapore Compliance

Introduction

Money laundering is an illegal practice that incorporates the usage of a cash business, including a launderette, to promote the combination or close association of both legitimate and illegitimate funds.

Also, it is a nonspecific means of covering up the initial proceeds of the funds, a practice commonly known to many as layering.

Since there is always a need to disguise the cash, the launderer will mainly opt for lawful or genuine cash-based ventures to conceal the source of their illicit money.

Initially, the crucial areas that the money launderers would focus on to launder their money are cash-based businesses. The venture of a launderette is a clear example of such an appropriate means or tool for the money launderer.

Forms of Money Laundering

Generally, there are two primary forms of money laundering, including both professional and amateur forms.

  • Professional Laundering Form: The form of laundering is more complex and costly to recognize. The professional money launderer will determine a specific fault in the control systems run by a financial institution or any regulatory organization.
  • Amateur Laundering Form: On the other hand, amateur money laundering significantly fails to cover its tracks very well. It allows causes for concern that are relatively simple to recognize either by workers being diligent or through modeling systems.

Types of Criminals in Money Laundering

  • Terrorists
  • Gang Members
  • Bad Politicians
  • Drug Dealers

Main Objectives of Money Laundering

The foremost opportunity to achieve the laundering objectives can be through the coin-operated launderettes, an overall cash-based venture. The initial money laundering significantly utilized an authentic cash-based undertaking to cover up and alter ill-gotten gains.

Enjoying Fraudulent Gains from Unlawful Acts

An individual that engages in the unlawful act and enjoys some fraudulent gains will strive to ascertain that they can utilize the illegally obtained funds without other persons realizing that they are the outcome of unacceptable behavior.

To achieve such, the participants will seek to masquerade the proceeds so that the source of the proceeds is concealed, thus making the funds appear to be valid.

Making Illegitimate Funds to Appear Legitimate

There is a high possibility of making a mixture of acceptable and unacceptable funds appear legitimate, which would have led to the laundering objectives.

All the funds will indiscriminately seem to have originated only from the legitimate venture, although a bit of the fund arising from a particular unlawful act of some type.

Therefore, the utilization of a launderette business will allow for the achievement of money laundering objectives through a criminal being able to masquerade the natural source of their funds such that they appear to be from genuine sources and can be utilized freely.

Types of Businesses Susceptible to Money Laundering

Some of the common types of business that are vulnerable to money laundering include:

  • Casinos
  • Launderettes
  • Asset management
  • Antiques
  • Insurance
  • Investment Company
  • Trading company

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