Money Laundering is the process of making earning from criminal activities into legitimate money. It’s called “laundering” because the money from criminal activities is considered “dirty” money, so, “laundering” it would “clean” it. AML is the activity of preventing and identifying those activities.
The general process of money laundering begins by placing the dirty money into the financial system, layering it under the cover of a legitimate business and then integrating it by acquiring the funds legally. There are various strategies and tactics to successfully laundering money but with the aid of technology and broader reach of the global financial system, it is much more difficult to succeed.
Because there are so many ways and so many places criminals try to launder money, there are many organizations involved. FATF was formed to provide guidelines for enforcement of anti-money laundering activities. All of the financial regulators are involved in oversight, review, exam and enforce AML activities. Intelligence and law enforcement organizations are also involved because the criminal activities tend to be mixed with other criminal activities.
About the Author: Marcus Maltempo is a compliance professional with more than a decade of experience helping banks, law firms and clients manage investigations and regulatory responses.