Money laundering is when criminals take ‘dirty money and make it look ‘clean’. It is essentially a way in which they make it look like they have earned the money legitimately. It can be a real problem for banks and other financial institutions as well as businesses and is one of the reasons that an AML ID Check is important.
Laundering money is a crime and it has been committed by people from all walks of life and a variety of techniques can be used to ‘clean’ money. For this reason, many banks will have strict procedures and processes in place to be able to identify any potential activity on an account that could be linked to money laundering. Crypto-currencies and online banking have made this job much harder as the process of moving money quickly has been made easier with these technologies. In some cases, it has even become an international investigation with links to organised crime and terrorist groups being highlighted as a part of the investigations.
The process of laundering money essentially involves depositing ‘dirty’ money into legitimate accounts in amounts that do not arouse suspicions. This money is then made to look clean by ‘layering’ which usually involves accounting tricks and transactions. The money is then withdrawn legitimately from the bank account, making that money now appear to be ‘clean’. It means that banks have to be on constant guard so that nothing slips under the radar.