Question

what can joe do to wilve hus situation snd what is a case similar to this?

Consider the following scenario. Joe has an expertise producing fake high-end consumer fashion products, fraudulently using the actual logo of the original manufacturer. He wants to sell these, but in today's world you just cannot open up a walk-in store for such merchandise since the authorities are on the lookout for such fraud. Further, and as you know from your own experience of using a credit card today for buying just a simple coffee, hardly anyone deals with cash. But how can Joe sell his goods say on the internet and get a credit card payment processor. These payment processors will not issue to their customers the capability to accept credit card payments without making sure they KYC - meaning knowing that their customers are going to have them process legitimate business transactions. The major credit card companies have the same basic screening responsibilities as banks for the customers they serve. Joe is not alone with his dilemma in the world of fraudsters today and so in the recent past variant forms of laundering have been borne. There are a few names for these and your job is to discover those and understand what this new world of laundering is all about...how it works in terms of placement, layering, and conversion.

Answer 1

Money laundering is the process of making large amounts of money generated by a criminal activity, such as drug trafficking or terrorist funding, appear to have come from a legitimate source. In simple words it is the process where money is generated from illegal sources but it is falsely shown as earned legally and ethically. The criminals try to clean the dirty money by the process of laundering.

Process of money Laundering:

• First step is Placement. It puts the dirty money into the legal financial system.
• Then is Layering which conceals the money through series of book keeping tricks and transactions.
• Last step is Integration where the now-laundered money is withdrawn from the legitimate account to be used for whatever purposes the criminals have in mind for it.

Examples

• Suppose I own a cafe. I may inflate the cash receipts to accumulate illegal money and can then deposit it in the cafe's bank account. I can withdraw it when I may require it for some illegal purpose.This is referred to as Fronts.
• Smurfing is another form of laundering. Here the criminal breaks up large chunks of cash into multiple small deposits, often spreading them over many different accounts, to avoid detection.
• Currency Exchanges, wire transfers are also other sources of laundering. Here criminals sneak large amount of cash across borders and deposit it into their foreign accounts.
• Other methods can be investing in shell companies that exist only on paper, discreetly investing in real estate, gambling etc.
• The electronic money laundering is new fuel to fire. Online banking payments, anonymous online payments using mobile phones and transfer of funds from one person to another through mobiles have increased the incidents of money laundering.
• Use of Cryptocurrencies like bitcoin have also increased the incidents of money laundering.