Money Laundering

Money laundering

Nana Nimo Appiah-Agyekum([email protected], Office: GB S9)

Thursday, 3rd November, 2011 @ A1 ,

UGBS

mailto:[email protected]

The poorest countries of the world


Thursday, 1st september, 2011 @ A1 , UGBS


Background



Zimbabwe 100 billion dollar is not even enough to buy a loaf of bread.


Background



AfghanistanAfghanistan has 28 million people is the worlds' largest exporter of heroin


Background



Central African Republicentirely dependent on foreign aid and NGOs. It's self-sufficient when it comes to food but has malnutrition and famine because farm owners rather sell their products to other foreign countries.


Background



Burundiknown for its wars. has the highest percentage of HIV and AIDS, poor access to education and corruption. majority of children suffer from chronic malnutrition.


Background



DR Congo 2nd largest country in Africa by area and the eleventh largest in the world. has the world's second-highest rate of infant mortality. More children under the age of five years old die from pneumonia


Background



Eritreahas 824 schools and two universities. Illiteracy is one of their biggest problems. Their economy is largely based on agriculture; about 80% of the people are involved in farming and herding.


Background



Niger Economy centres on subsistence crops, livestock and some of the world's largest uranium deposits.Drought and food crises are common. People die of diarrhoea, hepatitis A, malaria, typhoid fever and meningococcal meningitis


Background



Liberia high unemployment rate and noted for blood diamonds during the civil war. Diamond exports are banned by UN. Education sector is hampered by inadequate schools and supplies, as well as a lack of qualified teachers.


Background



Sierra Leonepopulation is about 6.4 million; about 66% adults are illiterate. 50 000 people were killed in the country's civil war, leaving the people even poorer than ever.


Background



Sierra LeonePoverty. Majority of women in Somalia are unemployed. pregnancy and poverty are the main factors that contribute too poverty.Pirating


Money laundering




Meaning • “the process by which one conceals the

existence, illegal source, or illegal application of income and then disguises that income to make it appear legitimate” • the process through which criminals make

“dirty” money appear “clean.” • wealth from unlawful source is made to

appear legitimate, usually through a multitude of financial transactions




Money laundering activities• drug trafficking• Visa racketeering, • piracy, • dumping of toxic waste,• credit card scams,• embezzlement of public funds • dealing drugs• selling arms • smuggling contrabands and people• Extortion




Reasons for laundering money1. Avoiding the law Persons operating profitable but illegal

enterprises have to keep the enterprise running while avoiding the scrutiny of law enforcement. When caught, they- go out of business - lose their invested capital and profits - are also likely to rot in jail.




Reasons for laundering money2.Mitigate risks in handling ‘earned money’ The volume of cash earned in these

dealings creates several vulnerabilities - gathering and transporting the money makes the dealer vulnerable not only to law enforcement but also to theft from other dealers.

With money laundering, the money moves around the world, across borders, at the mere click of a buttonNana Nimo Appiah-Agyekum

([email protected], Office: GB S9) Thursday, 1st september, 2011 @ A1 , UGBS


Reasons for laundering money- there are no border guards, customs agents

or coast guard boats to evade; - traffic stops and drug detection dogs do not

threaten money shipments; - underworld competitors cannot rob you;- you don’t require sophisticated

transportation logistics




Reasons for laundering money3. Safe enjoyment of crime money - ostensible wealth and a lavish lifestyle

without a legitimate income can attract the unwanted attention of law enforcement

- there is no point in risking your life for crime if you cannot safely enjoy the fruits of your labour.




Reasons for laundering money4. To cover operating expenses• Money covers operating expenses,

replenishes inventories, purchases the services of corrupt officials to escape detection and further the interests of the illegal enterprise, and pays for an extravagant lifestyle.

• To spend money in these ways, criminals must make the money they derived illegally appear legitimate. Nana Nimo Appiah-Agyekum



Reasons for laundering money5. Hide trail of money• a trail of money from an offense to

criminals can become incriminating evidence.

• Criminals obscure or hide the source of their wealth or alternatively disguise ownership or control to ensure that illicit proceeds are not used to prosecute them.




Reasons for laundering money5. Avoid detection and seizure • the proceeds from crime often become the

target of investigation and seizure. • To shield ill-gotten gains from suspicion and

protect them from seizure, criminals must conceal their existence or, alternatively, make them look legitimate.




The Money laundering cycle



Stage 1 - Placement•placement of proceeds derived from

illegal activities from the scene of the crime to a place, or into a form, less suspicious and more convenient for the criminal.• introduces proceeds of crime into the

legitimate financial system.



Stage 1 - Placement•placement methods include - depositing in account: - currency conversion;

- buying luxury items with cash; - co-mingling illicit cash with cash generated in a legitimate business like a restaurant;

- paying off another’s credit card; etcNana Nimo Appiah-Agyekum


Stage 2 - Layering• involves the separation of proceeds from

the illegal source through the use of complex transactions designed to obscure the audit trail and hide the proceeds • To layer is to distance the money from

its illicit source. Funds are therefore moved around: from bank to bank, from entity to entity, and from jurisdiction to jurisdiction. Nana Nimo Appiah-Agyekum


Stage 2 - Layering• Layering methods- Nominees, trusts and front companies,- purchase of & the co-mingling of accounts. - Shell corporations & offshore banks (because

of the difficulty in obtaining information to identify ownership interests and acquiring necessary account information).

- The object of the layering is to obfuscate the audit trail and make it impossible to prove that the money has a tainted source. Nana Nimo Appiah-Agyekum


Stage 3 - Integration• the conversion of illegal proceeds into

apparently legitimate business earnings through normal financial or commercial operations. • integration creates the illusion of a

legitimate source for criminally derived funds and involves techniques as numerous and creative as those used by legitimate businesses to increase profit and reduce tax liability. Nana Nimo Appiah-Agyekum


Stage 3 - Integration•Common techniques - producing false invoices for goods

purportedly sold by a firm in one country to a firm in another country,

- using funds held in a foreign bank as security for a domestic loan,

- comingling money in the bank accounts of companies earning legitimate income

- purchasing property to create the illusion of legal proceeds upon disposal.Nana Nimo Appiah-Agyekum


Money laundering in sub-saharan Africa



Effects• affects the level of economic development• seriously dents the image of the continent at

the international arena•discourage or frustrate legitimate business

enterprise• corrupt the financial system and ultimately,

the socio-political system•affects the level of direct foreign

investment Nana Nimo Appiah-Agyekum


Effects• taint the integrity of financial institutions

which has a negative impact on the soundness and stability of these financial institutions• crime, underground activity, & money

laundering take place on a large scale but are not captured. They distort macroeconomic policy • adverse consequences for interest and

exchange rate volatility, particularly in dollarized economies



Why ML is increasing in Africa•dependent nature of their economies• cash-strapped economies cannot realistically

discriminate in the type of funds they accept• as the major financial centres tighten their

regulations in the well-known havens, attention is shifted to lesser known countries•deregulation of many of these economies, in

obedience to SAPs and the need to attract FDI leads to relaxed foreign exchange regulations and other restrictions in financial laws and fiscal policies.



Example •Mr B, a drug trafficker transports several

quantities of cocaine from Nigeria to London undetected. The proceeds which are in foreign exchange are immediately transferred into an account in England in the name of B’s company and the funds are subsequently scattered into several accounts belonging to B’s company in several countries. The funds are then used to acquire choice properties in America and some invested in a high-flier enterprise in Nigeria:



Money Laundering

Documents

moneynana

nana nimo

money laundering

laundering

nananimoemail

law enforcement

bs company

1st september