Money laundering is a process used by criminals to hide the source of their illegally obtained funds. It involves taking money from illegal activities and making it appear as if it has been earned through legitimate means. There are several methods used to launder money, including currency exchanges, bank transfers, cash smuggling, real estate laundering, and bank laundering. Money laundering can also be done through scalability, where large amounts of money are divided into smaller sums that are more difficult to trace.
The Bank Secrecy Act was created to help combat money laundering by requiring financial institutions to meet certain reporting requirements. However, money laundering is still a major problem and law enforcement agencies have had to resort to other methods to detect and confiscate laundered funds. In recent years, casinos and real estate agents have been involved in scandals for aiding and abetting money launderers. In order to combat money laundering, governments have created financial intelligence units such as the Afghanistan Financial Reporting and Transaction Analysis Center (FinTraca).
These units are responsible for tracking and seizing the profits of criminal activities. They also work with international government organizations to find new ways to detect money launderers. In Canada, casinos, money service firms, notaries, accountants, banks, stockbrokers, life insurance agencies, real estate sellers, and metals and gemstone dealers are subject to reporting and record-keeping obligations under the Proceeds of Crime (Money Laundering) and Financing of Terrorism Act. Other customers such as those with private bank accounts and those of foreign government officials are subject to greater due diligence because the law considers those accounts to be at greater risk of money laundering. The successful prosecution of criminals for money laundering requires governments to take a proactive approach in tracking down illegal funds.
This includes monitoring financial institutions for suspicious activity, increasing due diligence for certain customers, and creating financial intelligence units that can track down laundered funds.