Money Laundry

Its Social and Economic Impacts

By: AFIQAH NUR YAHYA (G1121044) NORSURIA BTE JANI (G1121916) NUR IFFAH MUHAMMAD NASIR (G1127580) NUR FATIMAH MOHAMED ALI (G1113136)

Table of Content
1. 2. 3. 4. 5. 6. Introduction to Money Laundry Social Impact of Money Laundry Economic Impact of Money Laundry Case Islamic Perspective Solutions

Definition of Money Laundry

Money Laundry is a method to wash away the illegal sources obtained fund in order to conceal the true nature and source of fund and transmit it to be seen as legal.

Washing dirty money

3 Stages of ML
PLACEMENT

Introducing the illicit funds into the financial cycle.

LAYERING The moving and transferring of the funds in

order to disguise the origins and true ownership of the money.

INTEGRATION
This is when the criminal takes economic

advantage of the illicit funds and they appear to have come from legitimate sources.

Deposited in

Deposited in

Deposited in

PLACEMENT

Bank A Transferred to

Bank B Transferred to Bank E

Bank C Transferred to Bank F

LAYERING

Bank D

Transferred to
Bank G Bank H

Bank I

INTEGRATION

Legitimate business

The Social Impact

Money laundering as the underpinning(base) of transnational crime Negative globalisation and societal integration with transnational crime Transnational crime and money laundering: the danger of xenophobia Transfers economic power from the market, government, and citizens to criminals. (negative socioeconomic effects) Virtual take-over of legitimate government.

The Economic Impact

Loss control of economic policy o Effect to GDP o Effect to currencies and interest rates Undermining the integrity of financial markets Economic distortion and instability Undermining the legitimate private sector Loss of revenue Risks to privatization efforts Reputation risk

Case: Operation Polar Cap (USA)

Largest single money laundering operation ever broken up by the U.S Government. Example of greed and tunnel vision on the part of bankers.
Did not lodge suspicious transactions report.

Businesses used to make drug money.

Explosive cocaine (Crack) use among Americans.
The sales were washed through gold/jewelry businesses.

Demand for smuggling was higher= greater amount to launder.

Islamic Perspective
Surah al-Baqarah verse 188: "And do not eat up your property among yourselves unjustly and do not use it as bribe for the judges, with intent that you may eat up wrongfully and knowingly (even) a little of other people's property.

Deceiving

Concealing

Unlawful trade

Unlawful wealth acquisition

*Islamic Economic System should reflect a comprehensive system of moral and divine principles.*

Ways to Counter cum Solutions

The support of operational-level personnel in the jurisdictions affected The need for greater transparency and oversight of their economies To acknowledge at the international level that crime and corruption are intrinsically questions of development Global standards and international cooperation Properly structured training and technical assistance programs

Conclusion