Evil of the crimes has spreaded around the globe and same goes for money laundering as it has grown to be a threat to governments, financial institutions, and regulatory agencies while also creating some serious issues. Although scammers are constantly doing so much hassle to come up with new ways in order to tuck away the source of money which they have obtained illegally and later integrated it into the legal financial system at the same time. Today, this blog will help in highlighting the urgency of modern features regarding Anti-Money Laundering (AML) simply by discussing real world cases that offer more detailed information about the strategies used and their results at the same time. Following are the three notable instances of money laundering which are going to help in illustrate the image in which the movement of illegal funds across nations, sectors, and financial networks will be portrayed:
1. The Panama Papers and the Offshore Shell Company Scandal
Whole world was badly shocked in the year of 2016 when the Panama Papers revealed the true colors by exposing how business executives, celebrities, and affluent people take advantage of the offshore shell companies with the intention to conceal their wealth. Panamanian law firm Mossack Fonseca was able to generate about 11.5 million documents that demonstrated how shell firms were set up to evade taxes, launder money, and hide financial activities directly or indirectly among other things.
How it Worked:
Wealthy individuals planned to set up shell companies in the offshore locations like Panama and the British Virgin Islands in order to make illegal funds appear less suspicious and later moved into those same companies under the semblance of legal investments or business operations.
However, the actual source of the money was hidden by simply distributing innumerable transactions over numerous companies all over the globe.
What was the overall Impact?
If we talk about the impact which Panama Papers has created, it solely managed to expose nearly $2 billion in links to illegal financial behavior and corruption around the world. Although, it is a fact to mention that many companies were either directly or indirectly connected to money laundering activities despite the fact that offshore accounts were only allowed in certain jurisdictions which obviously led to international investigations and modifications to financial transparency laws as a result.
2. The Vancouver Real Estate Scandal: Laundering of Money Through Exotic Properties
In a different scenario, the Vancouver Real Estate Scandal revealed how Canadian organized crime syndicates exploited the mortgage and housing markets to launder billions of dollars by merely adopting the strategy of upmarket real estate.
How it Worked:
Scammers usually tend to employ large sums of money with the help of anonymous shell corporations with the intention to purchase pricey homes in this case and later earnings from the sale or rental of those specific assets simply surfaced as legal revenue in the financial cycle.
Such a nature of transactions were originally related to the world of real estate and offered a convenient approach to the scammers to utilize an approach of tucking away the source of the illegal money at the same time.
What was the overall Impact?
Such a specific strategy contributed to the rise in Vancouver housing prices simply through artificially raising the real estate prices and discouraging locals from purchasing it as well. Hence, it shocked everyone when the detailed research helped in revealing a clear connection that was between drug trafficking and real estate transactions simultaneously.
3. Using the Black Market Peso Exchange for Trade-Based Laundering (BMPE)
There was a gang in Columbia who used to deal in drug gangs in the Black Market Peso Exchange and were responsible for one of the most well-known cases of trade-based money laundering in recent years of the global history of finance. They were able to launder money that was originally gained from the sale of drugs and illegal in its nature around the jurisdiction of the United States by manipulating trade transactions.
How it Worked:
Scammers who were originally drug traffickers were able to earn money in the currency of US dollars simply through selling illegal commodities like drugs and other items in the jurisdiction of the US. Intermediaries subsequently utilized the same money to purchase the goods from any American companies that specifically included stuff related to textiles and electronics which were subsequently transported to various regions of Colombia.
What was the overall Impact?
Overall ability of the cartels to launder billions of dollars simply helped in demonstrating how easy it is for the criminal networks which might exploit international financial systems if they have any weaknesses.
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