MONEY LAUNDERING (All you should know)

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INTRODUCTION

Money laundering strategies have evolved with the advancement of technology. As a result, suspicious behavior is generally flagged by AML software. Large money transactions, recurrent inflows of monies into an account, and cross-checks with people on watchlists are examples of these flags and safeguards. Cryptocurrencies aren't the only ones affected by AML. AML restrictions can be applied to any asset or fiat currency.

Regulation has taken a long time to catch up with cryptocurrencies. AML procedures and compliance measures change on a regular basis as blockchain technology evolves. However, this isn't always regarded as a good thing. The asset's privacy and decentralization are valued by many bitcoin supporters. As a result, increasing regulation and recording of users' identities are frequently perceived as going against the spirit of crypto.

MONEY LAUNDERING

When criminals disguise illegal funds as legitimate cash, investments, or financial assets, they are known as money laundering. Drug trafficking, terrorism, and fraud are among the crimes that have resulted in the revenues. Countries have different laws and regulations in place to combat money laundering. Many governments, as well as the FATF, are working to improve rule alignment.

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Three stages of money laundering

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• Placement

This is the initial illegal money introduction into the financial system.

• Layering

Covering up tracks of the illegal funds. This is usually done by constantly moving them about in other to make their tracking difficult or using crypto transaction as to conceal the funds origin.

• Integration

This is the process of reintroducing the illegal money into the system using various investments and bussinesses as a cover up.

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How money laundering is done

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The three processes outlined above can be completed in a number of ways. For cash-based services in shops, restaurants, and other establishments, a traditional strategy has been to manufacture bogus receipts. Businesses are used as money laundering fronts by an individual or group. Counterfeit receipts are created and paid for using "dirty" physical cash, converting them into genuine income. This influx is then mixed up with legitimate transactions, making it difficult to tell the difference.

Illegitimate cash, on the other hand, are now more frequently digital than actual cash. The procedures used to launder money are affected by this distinction. There are many more alternatives now than before for hiding and washing "dirty" money. You can send money directly without through a bank, for example. Payment networks such as Paypal and Venmo add another layer for money launderers to use and for regulators to monitor.

The situation is made even more difficult by anonymizing technology like VPNs and cryptocurrencies. It can be difficult to connect a specific person to money laundering. Tracking crypto "to the edge" is one technique of combating this. You can trace laundered funds to a crypto exchange account or a bank account under someone's name by following a blockchain "paper trail" to an exchange. Buying crypto in cash or through peer-to-peer services, on the other hand, makes it harder to track dirty money entering and exiting the financial system.

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Anti-money laundering measures

✅Huge deposits and withdrawals or a sudden increase in transaction activities from a previously low transaction account are automatically flagged.

✅The suspect's ability to withdraw funds is usually stopped during investigation. It further remains stopped if found guilty after investigation.

✅The authorities are informed if evidently found guilty. The stolen funds are retrieved and returned to the legitimate owner.

Nevertheless, it is still difficult to apply anti-laundering measures in cryptocurrency because its transactions are irreversible and completely anonymous.

CONCLUSION

Money laundering has been a crime as old as man's greed itself. There has been series of attempt to hinder such crime but with technological advancement, its as though various measures set to fight money laundering are proving abortive but I believe that in no time, there will be ways to properly eradicate it.

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