Examples of money laundering
1. Shell companies: A person sets up a fake company or uses an existing legitimate business to disguise the illegal source of funds. They then use the company to mix legal and illegal funds, making it difficult to trace the origin of the money.
2. Trade-based laundering: Criminals manipulate the invoicing or pricing in international trade transactions to move money across borders. For example, they may overvalue an export or undervalue an import, effectively "laundering" money during the process.
3. Smurfing: Also known as structuring, this involves breaking down large sums of money into smaller, less noticeable amounts to evade reporting requirements. Criminals will make multiple deposits or transactions of smaller amounts to avoid suspicion.
4. Digital currency: Cybercriminals exploit digital currencies like Bitcoin, which allow for anonymity and facilitate cross-border transactions. They convert illicit funds into cryptocurrencies to disguise the trail and then convert them back into a traditional currency.
5. Casino laundering: Criminals can use casinos to launder money by converting their illegal proceeds into chips, playing a few games, and then cashing out, claiming the winnings as legitimate funds.
6. Real estate transactions: Money launderers may use the real estate market by purchasing properties with illegal funds, then selling them or renting them out. This helps legitimize the money while also making it difficult for authorities to trace.
7. Offshore accounts: Criminals may use offshore jurisdictions with lax regulations and secrecy laws to open bank accounts. They can then deposit and move funds through these accounts to hide the source of the money.
8. Hawala system: A traditional money transfer system prevalent in many parts of the world, including the Middle East, Africa, and South Asia. It is based on trust and relies on a network of brokers who transfer funds without actually moving physical money, making it difficult to track transactions.
It's important to note that money laundering is a serious crime and these examples are meant to provide an understanding of how it can occur.