The process of laundering money involves the passing of illegally obtained money through the financial system in an attempt to conceal the origin of the funds. Money laundering and terrorism go hand in hand because terrorist groups have to surreptitiously transfer funds in order to avoid detection. Laws exist in nations throughout the world that are designed to detect and prevent money laundering and terrorism, and many governments work closely with foreign nations to eradicate money laundering operations between countries.
People involved in money laundering place illegal funds in bank accounts that also house funds obtained through legal channels. In order to make deposits without arousing suspicion, criminals structure their cash deposits, which means they make a series of small deposits rather than one large cash deposit. Funds are then rapidly moved between a number of accounts until it becomes difficult for authorities to trace the exact origin of the money.
Terrorist fund raisers employ money laundering techniques to pass funds to terrorist groups around the world. Individuals rely on laundered funds to buy weapons and supplies. International terrorist groups also need access to money in order to travel between nations, and since international wire transfers require extensive paperwork, funds are laundered through banks in various different countries before being sent to sleeper agents and affiliate groups overseas.
The International Monetary Fund (IMF) is an international body that loans money to countries, monitors economic developments around the globe, and provides national bank employees with technical assistance and training. Due to its global reach, the IMF plays an important role in the fight against money laundering and terrorism. In 1989, the Financial Action Task Force on Money Laundering (FATF) was created with the intention of codifying procedures against money laundering around the globe. The IMF works closely with the FATF and individual nations to improve surveillance, information sharing, and technology that can be used to combat both domestic and international money laundering enterprises.
In the United States, banks must comply with the 1970 Bank Secrecy Act, which requires financial institutions to keep records of suspicious transactions and file reports on high dollar cash transfers with the intention of detecting criminal activity. During 2001, Congress combined anti-money laundering and terrorism efforts with the passing of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA PATRIOT). Financial institutions must obtain and record information on any individuals opening bank accounts, and both individual employees and financial institutions who fail to comply with the provisions of the Act face severe penalties. Similar measures have been passed in other nations that have been impacted by terrorism.
