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Money laundering

Furthermore, the ML does not have to involve physical exchange of money or currency. Modern concept therefore considers a transaction or formation of relationship to be a case of money laundering if it involves any form of property or benefit, tangible or intangible earned through criminal activity which includes tax evasion. ML does not necessarily require movement of criminal proceeds for being laundered. Thus, financial institutions especially banks can easily get involved in money laundering process when money earned in a legitimate activity and deposited into a bank account in another country by a person becomes a laundered money assumed as done with the connivance of the bank if he fails to declared the earnings in his tax return in the country in which it has been earned and the bank also fails to report it as s suspicious activity (Hopton 2009). The USA Office of the Comptroller of the Currency (OCC) has defined money laundering as the criminal practice of filtering ill-gotten gains or dirty currency through a sequence of dealings, so the currency is cleaned to appear as if earned by lawful conduct (McClean 2007). Criminals resort to money laundering to legitimise substantial portion of their ill-gotten wealth as otherwise they cannot put it to use. Moreover, they do not need the entire money for their ongoing criminal ventures. They are motivated to launder their tainted money in order to have respectful postitions in society by investing the money so earned in respectable avenues. The proceeds of crime were once said to channel through launderettes in the USA to enable the actual notes to be offered as lawful commercial income, thus earning the expression Money Laundering (McClean 2007). Money Laundering process It involves three stages as per the tradition. First, placement of funds of criminal origin in to the financial system through direct or indirect means. Second, resorting to layering by which receipt of criminal proceeds are blurred through creation of layers of financial transactions with the object of hiding the audit trail and providing anonymity. Third, after successful layering, integration process pumps the laundered money into the mainstream economy so as to make them appear as funds received during the course of business. These stages are subtle in that they more often overlap or take place simultaneously (Hopton 2009). The Financial Action Task Force (FATF) FATF is autonomous body representing various governments and entrusted with introduction of measures to ensure against ML and providing funds for terrorism using the global financial system. The recommendations of FATF are required to be implemented to counter money laundering and considered as the standard for anti-money laundering (AML) and counter-terrorist financing (CTF) (FATF 2010). Financial Industry Regulatory Authority (FINRA) FINRA is the autonomous regulatory body of the USA governing activities of securities firms in the United Sates. Anti-money laundering compliance program of FINRA requires each member to develop anti-money laundering program so designed as to monitor the member’s compliance with the requirements of the Bank Secrecy Act (31 USC) (FINRA n.d.). Suspicious Activity Report (SAR) Suspicious Activity Reporting is the requirement to be complied with by all financial institutions such as banks, credit unions, brokers or dealers in securities

Money laundering