EXPLAINER: How exactly does money laundering work?

Money laundering is a criminal activity that involves the process of making illegally obtained money appear as though it has been obtained legally. The process involves a complex series of financial transactions, and it can be difficult to track and detect.

The illegal act of money laundering is often associated with organized crime and drug trafficking, but it can also be used to conceal the proceeds of other criminal activities such as fraud and corruption.

GhanaWeb Business in this article, takes a look into how money laundering is conducted, the different techniques used, some real-life examples as well as institutions in Ghana responsible for checking money laundering activities.

Steps involved in money laundering

Placement

The first step in money laundering is known as ‘placement’ which involves introducing dirty money into the financial system. This can be done in a number of ways, such as depositing cash into a bank account, purchasing high-value items with cash, or investing in businesses or properties.

Criminals often use front companies or shell corporations to disguise the true ownership of these assets.

Layering

The second step in the process of money laundering is known as layering, which involves a series of transactions designed to obscure the origin of the funds.

This method entails moving the money between different accounts, jurisdictions, and financial institutions. For example, a criminal might transfer money from one bank account to another in different countries, or they might use complex financial instruments such as derivatives to create a web of transactions that is difficult to trace.

Integration

One final step in the process of money laundering is known as integration, which involves reintroducing the laundered money into the economy in a way that appears legitimate.

This can be done by investing in legitimate businesses or properties, or by purchasing luxury items such as yachts, sports cars, and expensive jewelry. Criminals may also use the laundered funds to pay for their personal expenses or to support their criminal activities.

Examples of money laundering schemes that got global recognition

Recently, a Nigerian socialite and internet sensation, Ramon Abbas popularly known as Hushpuppi was sentenced to 11 years in jail in the United States of America by a Central District Court in California for fraud and money laundering.

He will, however, spend nine years as he has already spent two years in a US jail.

He was arrested in Dubai and extracted to the US where he was charged with fraud and money laundering. He pleaded guilty to all charges levelled against him.

Also, Ghanaian songstress, Mona4reall is currently under investigation and has been extradited from the United Kingdom to the United States of America for her alleged involvement in a romance fraud that cost victims over $2 million.

The role of Ghana’s Financial Intelligence Centre in combating money laundering

In Ghana, the Anti-Money Laundry Act (2020) caters for all issues of money laundering. The Act consolidates the law relating to the prohibition of money laundering and provides for the establishment of the Financial Intelligence Centre (FIC) and for related matters.

According to the Anti-Money Laundry Act, a person may be culpable of money laundry for; abetting money laundry and conspiracy to commit money laundry.

Persons convicted of money laundry under this Act are liable to the following; a fine not less than one hundred percent and not more than five hundred percent of the proceeds of money laundering, a term of imprisonment of not less than twelve months and not more than ten years, both the fine and the term of imprisonment or a fine of not less than three hundred per cent of the proceeds of money laundering, in the case of a corporate entity.

It is worth noting that, in such cases, the State shall confiscate all proceeds of money laundering.

The institution responsible for enforcing the Anti-Money Laundering Act is the Financial Intelligence Centre (FIC).

The FIC is established as a corporate body by the Anti-Money Laundering Act and is charged with the responsibility of; assisting in identifying the proceeds of unlawful activity, to assist in combating money laundering, financing of terrorism, financing the proliferation of weapons of mass destruction and tax evasion, the FIC also makes available information to investigating authorities, revenue authorities, security and intelligence agencies.

The Centre also exchange information with similar bodies in other countries to help end money laundering, financing of terrorism, financing of the proliferation of weapons of mass destruction, tax evasion and any other unlawful financial-related activity, among other functions.

With additional files from Forbes and BBC Stories

EAN/MA