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Background
Money laundering
The overall reported scale of money laundering symbolises the power retained and the wealth generated by criminal activity. By providing legitimacy surrounding illicitly gained funds, Wright (2005, p. 68) suggests money laundering is “bad for domestic and international trade, bad for reputation of the international banking system and bad for effective governments”. Likewise, social consequences of money laundering (AUSTRAC, 2008) are considered to have the capacity to increase the levels of crime and corruption, and undermine the overall rule of law. As a phenomenon in which certain aspects frequently go unnoticed, research associated with money laundering remains ineptly constrained, owing in most part to the well-versed connection between money laundering and the underlying clandestine nature of illicit acts carried out by organised and transnational criminal groups.
Characterised frequently as a secondary offence successive to the predicate act, money laundering offers a flexible and dynamic process whereby those having responsibility for money laundering actively adapt to changing situational conditions. More often than not, money laundering will involve the exploitation of products and services, making it difficult to define and prosecute. As the demand for money laundering persists, criminal groups remain intent on identifying locations where the risks of detection are low. Accordingly, criminals are frequently inclined to favour regions and countries weak or ineffective at implementing and adopting universally compliant anti-money laundering legislation and regulations. In the past, global estimates have indicated money laundering represents the third biggest global industry, with only oil and agriculture generating higher incomes (Baity, 2000). Figures that are more recent suggest money laundering is quantifiable, with indications it now equates to US$1.6 trillion (UNODC, 2011) or 2.7 per cent of the global annual GDP. Nevertheless, accurate quantification of money laundering still faces many challenges, dominated for the most part by inappropriate statistical techniques never formally designed to gather details associated with money laundering or illicit markets.
Today, various processes exist through which to facilitate the laundering of illicit funds. In many instances, deviations from existing – more formally – documented methods are inhibited only by the imagination of those tasked with the responsibility of finalising the criminal process. More formally acceptable and widely publicised processes include trade-based money laundering (FATF, 2012) and the abuse of independent sectors or...