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3 Ways of Money Laundering and it’s Possible Solutions



3 Ways of Money Laundering and it’s Possible Solutions

What’s Money Laundering?

Money laundering involves ways of channelizing illegal money into a legal stream, by disguise means. Usually, by small transactions, breaking it into small and different deposits with investments that include peer-to-peer transfer, smurfing, money spread out into different accounts to avoid detection, currency exchange, wire transfer and “mules” and smuggling of cash across the border.

The basic purpose of such slug of money is to distant the amount from the proprietor and, then integration where the money is again brought back to the proprietor as “clean money”.


Stages of Money Laundering

There are three different ways and stages of money laundering,


This is the first step to transfer a slug of money away from the source. This can easily be done by identity forged or misrepresentation. This can be made possible through different channels like businesses, financial institutions, casinos, bureau de change, shops local or foreign. These processes can be done through many processes includes. 

  • Currency Smuggling
  • Bank Complicity
  • Currency Exchange
  • Security Brokers
  • Blending of Funds
  • Assets Purchase 


This is to make it more difficult to unhide or undo the covered identity behind laundering for law enforcement agencies. The known methods of it include,

  • Cash converted into money instruments
  • Material assets bought with cash then sold


This is the moment to channelize the money into the mainstream economy, through banks mainly so such monies appear to be normal business earnings. Unlike layering, integration includes person and channel details provided through informants, known processes of this includes are,

  • Property dealing.
  • Front companies and false loans.
  • Foreign bank complexity.
  • False import/ export invoices.


Online World and Increase in the Pace of Money Laundering

The main cause of money launderers is to fly under the radar. The clever use of the internet let the launderers to fool naive policies. The current trend of online banking institutions, peer-to-peer transfer, mobile transactions, bitcoin currency, anonymous online payment services makes it real-time difficult to detect the illegal transfer of money even more difficult than ever before. Although, proxy server use and anonymize software make it the third component of money laundering. Detection of integration becomes almost impossible because of the transfer and withdrawal of money left little or no trace of an IP address.  

Gaming becomes another way to transfer ill-gotten money into clean money. In this way torrents of cash transferred into gaming currency, and after that it transfers back into real untraceable clean money. Money can also be laundered by online auctions and sales.

Present anti-money laundering legislations and their executions have a diminishing role when it comes to the detection of such cyber-crimes. The reason is the lack of advancement in AML laws, AML compliance with the secure identity verification service can reduce such threat of money laundering.


Why Online transaction require AML Compliance?

It has been quite some time since online transactions have become a cause of concern for the international monetary landscape because of the expense of financial risk. Money laundering schemes are getting vast day by day and small businesses are becoming victims of these attacks.

These businesses often lack knowledge and experience about the risks for online transactions. This is the main reason criminals target these types of businesses.

Certain types of transactions involving various risks. Oftentimes, business owners receive various opportunities that they can’t pass up and soon they discover the main reason behind that.
This is why every Online transaction should be screened to avoid money laundering and hefty fines by regulatory bodies.


Solutions to Prevent Money Laundering

Solutions to Prevent Money Laundering

Here are some ways to protect your business by taking anti money laundering tactics. These steps are crucial for every business to take.


Learn about Money Laundering Schemes:

New tactics are continually being developed by criminals. The more you learn and share with your team, the more likely you are to detect fraudulent attempts or illicit transfers.

You should know almost all ways of money laundering to make your environment completely risk free. Money could be laundered in many ways. For instance, conversion of illegal cash into financial instruments and including illegal cash in a personal account.


Establish a formal Anti-Money Laundering Scheme:

Anti-Money laundering formal policy should be formed by every type and size of business. This policy must include that which actions are in the count of money laundering and what measures should be taken to detect and deter money laundering.

For example, you can include a specific amount of transactions require additional information to be provided (as discussed on QuickBooks Support)


Maintain your Privacy:

Never share any personal information of your business with any person. Never share private data or financial data with any individual or other business.

Never disclose your algorithms or AML security checks with your customers to convince them for any purpose. Maybe fraudulent will get this information about your business and use it against your business for his fraudulent money laundering activities.


To conclude this we can say that, an AML compliance can help in screening business to identify the actual identity of clients by AML screening. This can lessen the threat of being an unintentional help in channelizing the dirty money into the circulation of the economy to become untraceable clean money. Money laundering can only be stopped by taking strong measures. AML screening should be the main focus of these measures.


Writer and tech expert, James Efron is the author of various blogs and wrote about many advanced technologies including artificial intelligence, machine learning and big data. He is also expert in writing about Digital transformation of multiple industries.