What is money laundering?
“Money laundering is the process of making illegal money to legal money.”
Process of making illegal money to legal money
There are three steps of making illegal money to legal money
Placement means ‘put’, –> putting black money into white money platforms. such as Placing/ Investing illegal money into the legal markets and businesses, such as banks, stock exchanges, gold, property, mutual funds, etc
Layering means creating a number of layers so it could become difficult to identify, investigate and
trace. Therefore, behind every layer, there will be legal money as you are investing in legal money platforms
How does this process work?
For example, First deposited the money into the bank; then withdraw from the bank and invest in the stock market; then withdraw from the stock market and invest in gold; then withdraw from the gold and invested in property, and so on.
‘Integration is a point of satisfaction for Money Launderer’.
The Criminal (money launderer) believes he has made enough transactions (layers) so no one can now trace them and no one can now detect their legal money.
At the Integration point, criminal is satisfied that he has successfully converted his illegal money into legal money in the eyes of government and law.
Anti-money laundering guidance
Code of Conduct says, audit firms should;
- Appoint Money Laundering Reporting Officer (MLRO)
- Spent more time than usual, reading the client and client screening
- Analyze, discuss and review the client’s anti-money laundering procedures (which are also known as internal control systems).
- Keep records for five years.
- Do not keep it confidential and secret if you (auditor) find a client involved in money laundering. Just whistleblow the client’s involvement.