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Breaking the Bank: What Is Money Laundering and Why Is It a Global Problem?

Did you know that the United Nations Office on Drugs and Crime estimates that between $800 billion and $2 trillion is laundered every year?

Even more shocking is that this estimate makes up between 2-5% GDP of the entire planet!

The rise of financial markets across the globe, it’s become easy for people to deposit dirty money.

But, what is money laundering exactly and why should you care about it? Today, we’re going to show you how money laundering works. Plus, we’ll talk about how it’s affecting countries across the world!

What Is Money Laundering?

According to Investopedia, money laundry is when a large amount of money is yielded by criminal activity. The actual process of laundering makes this money appear to have come from a legal source. These criminal activities can include sex trafficking, drug trafficking, or gun-running.

Money that comes from money laundering is often called ‘dirty’. Laundering is the process that occurs to make money look legit.

How Is Money Laundered?

The entire process that goes into money laundering is rather long and complex. Generally, laundering money starts when a person makes money off of a crime.

 
To make dirty money look clean, criminals use a technique called layering. This process makes dirty money look clean to banks.

Depositing dirty money between layers of clean money allows money launders to conceal where they’re getting dirty money from! This process helps to prevent red flags from being raised by financial institutions.

Due to these techniques that criminals use, it’s very difficult for national and international authorities to track money laundering.

Banks are required to report large cash transactions to international authorities. Large cash transactions (deposits and/or withdrawals) are one of the main signs of money laundering.

Online banking and cryptocurrencies have made it easier for money laundering to be passed around without detection. Online banking allows criminals to deposit a smaller amount of dirty money into several financial institutions at once.

By using several online banking options, criminals to

launder money allows criminals to pass small amounts of money to different accounts without raising any red flags.

Why Is Money Laundering a Global Problem?

Money laundering encourages criminals to take part in actions that harms other people. It even plays a part in harming the healthy functioning of economies across the globe.

Money laundering happens in nearly every country in the world. Sometimes, this crime involves moving money across several countries to make dirty money look clean.

This means that people are depositing ‘dirty’ money in one country, having it cleaned, and moving the ‘clean’ money into another country. Not only does this encourage a higher amount of criminal activity in one country, but it also causes inflation in another.

Looking to learn more about how money laundering is affecting economies and countries across the globe? Click here to learn about Iranian and Turkish sanctions at Iranconflictnews.

Money Laundering Explained

So, what is money laundering? It’s taking money obtained by criminal activity and processing it to make it appear clean!

Looking to learn more about how money laundering could be impacting you? Bookmark our site and check out our ‘World News’ section!

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