Handbook of Anti-Money Laundering.

CHAPTER 1WHAT IS MONEY LAUNDERING?

1.1 THE INITIAL CONCERNS

The growth industry which we refer to as money laundering has developed significantly over recent years. The industry really started with what might be considered a key public concern over organised crime and the negative impact that this was having on people. The governing authorities surmised that, by tracking the movement of cash, they would then be able to detect unusual patterns of behaviour. This led to a series of rules being put in place, originally locally but increasingly globally, to enable relevant authorities to identify organised crime through its use of the financial sector.

The key element that underpins the regulation is that inappropriate funds were being moved within the banking system to disguise the original source of the funds, enabling organised crime to make free use of funds that may have originated from tainted sources, including drug trafficking. Essentially, the plan was to use the movement of the gains to identify the criminal, since the original criminal activity was so hard to detect.

The impetus behind money-laundering legislation in any country always comes from some form of issue which is considered to be of such magnitude that it actually gets onto the political agenda. The legislation is then generally developed in a hurry to meet these perceived and specific needs. We are seeing this at present with the revised banking regulations, designed to try to prevent a financial crisis yet ...