A rookie’s guide to money laundering

Turns out, it’s not that difficult

I frequently talk about money laundering and how financial services industries are required to guard against it, but I’m consistently asked by friends and colleagues, “just how easy is it to take questionable cash and turn it into legitimate funds?” Turns out, it’s not that difficult.

Despite the damage that the illegal flow of money inflicts on the global economy, it’s been occurring for thousands of years and people do it every day. It’s international in scope, with China holding the dubious honor of being at the head of the pack. Conservative estimates have China losing more than $1 trillion between 2002–2011, despite laws prohibiting foreign exchange. Other countries with significant problems include Russia, Mexico, Malaysia, India, Saudi Arabia and Brazil.

So how is it done? There are several ways a U.S. citizen with a little illegal money can launder it, despite the many laws designed to thwart this activity.

Get opals and diamonds Down Under.

Australia produces some of the world’s finest gemstones, but it has yet to tighten up its anti-money laundering laws for purchasing them. Currently, anyone can pay cash for opals, diamonds and more without providing any identification. And Hollywood has frequently shown us how these stones can be smuggled back into the country where they can be exchanged for “clean” money from unscrupulous jewel dealers.

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Richard Paxton

CEO of the Alacer Group. Sharing the latest news in financial crimes and best practices that enable financial institutions to prevent money laundering.

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