is Money Laundering?
Money Laundering involves transactions intended to disguise the true
source of funds; disguise the ultimate disposition of the funds; eliminate
any audit trail and make it appear as though the funds came through legitimate
sources; and evade income taxes.
Money laundering erodes the integrity of a nation’s financial system
by reducing tax revenues through underground economies, restricting
fair competition with legitimate businesses, and disrupting economic development.
Ultimately, laundered money flows into global financial systems where
could undermine national economies and currencies. Thus, money laundering
is not only a law enforcement problem, but poses a serious national
and international security threat as well.
Combating Money Laundering
The Bank Secrecy Act (“BSA”) was enacted by Congress in 1970
to require insured depository institutions to maintain certain records
and to report certain currency transactions, in an effort to prevent banks
from being used to hide money derived from criminal activity and tax evasion.
These records and reports have a high degree of usefulness in criminal,
tax, and regulatory investigations and proceedings. Since 1970, there have
been many legislative and regulatory standards imposed to help prevent
money laundering and to strengthen the government’s ability to combat
money laundering and more recently, terrorist activity financing.