Money Laundering Research Paper

Money laundering is an activity in which black money, i.e., money earned illegally are transferred so that it appears to be legally earned, or can be used for private consumption without attracting suspicion. Often, money laundering is a kind of transnational crime.

This illegally obtained money is generally referred to as black unlike legally obtained funds that are designated as white.

To write a good research paper on the topic you must know that the black money can be of two types:

  1. Money obtained directly from criminal activities thefts, extortion, prostitution, drug trafficking, human smuggling, smuggling of liquor or tobacco or the like.
  2. Money obtained legally in the course of trade or as capital gain, but withheld from taxation.

Through various transactions black money can be converted in legal, white money, which may be presented and consumed openly.

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Previously, there seems to have been the case that the term money laundering used only on transactions related to the major players in the market laundering mafia’s money. Nowadays, the concept seems to have been extended so that it also intends legally or illegally earned money used in finance terrorism.

Money laundering is both risky and costly business for those who practice it, but it is usually necessary if the offender wants to use its funds for consumption, real estate and more. Society has several warning system that can detect when people with no declared income or wealth does great legal transactions, that is why the black money must be converted into legal income or wealth.

On a smaller scale, black money laundered through small cash deposits in bank accounts, money that is then transferred between banks in different countries and eventually used for the purchase of shares. Such transactions are usually difficult to trace. Small time gangster out of work tends to simply purchase goods and services in cash, especially such as social services. On a larger scale laundering can done for example by black money recorded as cash revenues in a legal business, and thus can be used for payment of salaries and the purchase of assets.

One can also launder money at casinos or betting where the black money is systematically invested to get legal benefits of receipt.

Money laundering is generally also a cross-border activities, taking advantage of differences in the laws and regulations in different countries – for example, by channeling funds through bank accounts in less scrupulous offshore or through real estate purchases in countries that do not closely examines the buyer’s background. One can then, for example, buy a property for white money and then sell it at a greatly overcharge for himself and “get paid” in the black money which can then be reported openly.

Payment systems are also often used. A common way is to transfer money to a foreign bank in fiscal paradise and then use a credit card from there for their consumption, although this can be traced if done too often.

Money laundering was not invented during the Prohibition in the United States, but it was then that the technology developed and refined. In this case it was necessary to hide income from the illegal sales of spirits. Money laundering has been facilitated by bank secrecy where especially the Swiss banks have been able to protect their clients and their assets, especially since Switzerland in 1934 codified the rules on banking secrecy by Swiss Banking Act.

To know more on the topic, use free example research paper and research proposal samples on money laundering.

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