Money Laundering

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A presentation to the Honors Finance Class entitled "Money Laundering: A Quick and Dirty Guide"

A presentation to the Honors Finance Class entitled "Money Laundering: A Quick and Dirty Guide"

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  • Adam – Slides 1, 2, 3Craig – Slide 4, 5Eric – Slide 6,7Kevin – Slide 8,9
  • This is Kenny. Kenny runs a cocaine empire. He currently has a large sum of money from drug sales that he wants to use. However, he needs to first make it seem like the money came from a legitimate source so it is not connected to criminal activity
  • Make money from Source A look like it came from Source B
  • Make money from Source A look like it came from Source B44 Pounds256 Pounds
  • Kenny works at a bank as a teller. He currently has $1 million dollars he wants to funnel through the bank in order to make it clean
  • At this point, the launderer enters the dirty money into a legitimate financial institution. Often times in the form of a cash bank deposit. So basically Kenny is depositing cash into various savings and checking accounts in the bank. Because Kenny is making the deposit, he is less likely to be caught by deposit limits and nosey tellers. This is the riskiest part of the laundering process.
  • From the legitimate bank account – Kenny will use various transfer types such bank to bank transfers, wire transfers between different accounts with different names in different countries, constantly changing the amounts of money in each account through different deposit and withdrawal amounts. Changing the monies currency and buying lavish gifts for himself.So as you can see – Kenny has bought himself a boat. And he is on a boat. With T-Pain
  • In this stage- the money re-enters the economy in a legitimate form. It appears as it has come from a legitimate legal transaction. This is accomplished by investing in a business in exchange for future profits, selling some of his assets to other legitimate entities. At this stage, it is very hard to catch the launderer because of the lack of documentation.So in this stage – Kenny sells his boat to a business and is free and clean to use the money.

Transcript

  • 1. Money Laundering
    A Quick and Dirty Guide
  • 2. The Set-Up
  • 3. What is Money Laundering
    Process of making “dirty” money clean
    Reasons for Laundering Money
    Tax Evasion
    Illegal Activity
    Hide Earnings
  • 4. Fun Fact
    $1 Million Dollars worth of cocaine weighs
    $1 Million Dollar of US Currency
    People will notice if you are trying to physically move a lot of money
  • 5. Situation
  • 6. Step 1 - Placement
  • 7. Step 2 - Layering
  • 8. Step 3 - Integration
  • 9. Epilogue
    $500 billion to $1 trillion laundered annually
    Criminal Activity still pays off
    Hurts emerging market countries
    Clean money moves out of EM banks for fear of government interference
    Loss of Tax Revenue
    Rest of us have to pay more taxes