Money Laundering

The United Nations estimates that $800 billion to $2 trillion is laundered globally each year — 2–5% of global GDP. Money laundering enables every form of serious crime: drug trafficking, terrorism, human trafficking, corruption, and tax evasion. Businesses that fail to detect and report suspicious transactions face massive fines, criminal prosecution, and reputational ruin.

1. Placement

Introducing criminal proceeds into the legitimate financial system:

• Structuring (smurfing) — breaking large sums into small deposits below reporting thresholds
• Cash-intensive businesses — laundering through restaurants, car washes, casinos
• Currency exchange — converting cash into foreign currencies
• Cash smuggling — physically moving cash across borders

2. Layering

Disguising the trail through complex transactions:

• Multiple bank transfers — moving money between accounts across jurisdictions
• Shell companies — creating entities with no real business activity
• Trade-based laundering — over- or under-invoicing international trade
• Real estate — buying and selling property to create legitimate transactions
• Cryptocurrency — using mixers, chain-hopping, and privacy coins

3. Integration

The "cleaned" money re-enters the legitimate economy:

• Luxury purchases — art, jewelry, vehicles, yachts
• Real estate investment — residential and commercial property
• Business investment — legitimate business acquisitions
• Financial instruments — stocks, bonds, insurance products
• Professional services — legal fees, consulting contracts

Businesses should watch for:

• Unusually large cash transactions or frequent transactions just below reporting thresholds
• Complex ownership structures with no clear business purpose
• Transactions with high-risk countries on FATF grey or black lists
• Reluctance to provide identification or inconsistent documentation
• Rapid movement of funds through multiple accounts
• Business activities inconsistent with the customer's profile
• Use of nominees or third parties without explanation
• Overpayment followed by requests for refunds to different accounts

• Banking and financial services — traditional gatekeepers
• Real estate — high-value, opaque transactions
• Crypto-asset providers — pseudonymous, cross-border, fast
• Luxury goods — art, jewelry, watches, vehicles
• Gambling and casinos — cash-intensive with payout mechanisms
• Professional services — lawyers, accountants creating corporate structures
• Trade and export — invoice manipulation across borders

• HSBC — $1.9 billion fine for AML failures (2012)
• Danske Bank — €2 billion fine for €200 billion in suspicious transactions through Estonia (2022)
• Westpac — A$1.3 billion fine for 23 million AML breaches (2020)
• Deutsche Bank — $629 million for Russian mirror-trading scheme (2017)

• FATF 40 Recommendations — international AML/CFT standards
• EU 6th Anti-Money Laundering Directive (6AMLD) — harmonized criminal offences
• US Bank Secrecy Act (BSA) — US AML framework
• UK Proceeds of Crime Act 2002 — UK money laundering offences