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Money Laundering: A Growing Concern
As the global economy continues to evolve, so too do the methods of money laundering. Criminals are increasingly using sophisticated techniques to disguise their illicit proceeds, often involving legitimate businesses and “shell” corporations.
The Stages of Money Laundering
According to a new report, money laundering involves three stages: placement, layering, and integration.
- Placement: This stage involves converting cash proceeds from criminal activities into more easily transferable assets. This can be done through banking transactions or exchanging the cash for valuable items.
- Layering: The second stage is where criminals use complex financial transactions to separate their illicit proceeds from their source. This can involve international wire transfers, using nominee companies or bearer shares, and investing in collective schemes.
- Integration: The final stage involves placing the laundered proceeds back into the economy as apparently legitimate business funds. This can be done through real estate investments, redeeming shares or units, or switching between forms of investment.
Retail Schemes Target Public
Financial institutions dealing directly with the public are particularly vulnerable to money laundering schemes. Criminals may use cash-based transactions to purchase investments, making it difficult to trace the source of the funds. Offshore businesses accepting cash are also at risk of being involved in money laundering.
Scope of Guidelines Expanded
The new guidelines apply to a wide range of financial services providers and relevant financial transactions, including:
- Banking business
- Financial business
- Venture capital
- Money transmission services
- And more
The guidelines also cover various types of trading activities, including:
- Foreign exchange
- Commodity-based derivatives
When Does the Guide Apply?
The guide applies to Relevant Financial Transactions involving an arrangement between two or more parties when at least one party is acting in the course of business. It also applies to the formation of a “business relationship” with the purpose of facilitating frequent or regular transactions.
In cases where circumstances are questionable and unexplained, identity verification and reporting may be necessary to prevent money laundering.
Money Laundering Legislation
The Money Laundering Prevention Act and the Proceeds of Crime Act outline the specific offenses related to money laundering in Dominica. A comprehensive guide to these laws can be found in Appendix 1.
Conclusion
As the fight against money laundering continues, it is essential for financial institutions and businesses to understand the complex methods used by criminals to disguise their illicit proceeds. By staying informed about these tactics, we can work together to prevent this illegal activity and protect our economies.