Money laundering can take various forms, and the methods used can vary depending on the circumstances, the type of illegal activity, and the individuals or entities involved. While there isn’t a single “most common” form of money laundering, several methods are frequently used by criminals to launder money. Some common forms of money laundering include:
- Structuring (Smurfing): This involves breaking down large sums of money into smaller, less suspicious amounts to avoid detection. Criminals might make multiple small deposits or transactions, often below the reporting threshold, to make the funds appear legitimate.
- Trade-Based Money Laundering: Criminals might manipulate international trade transactions to move funds across borders while disguising the true nature of the transactions. For example, they might over- or under-invoice goods or services to move money without raising suspicion.
- Shell Companies: Criminals might create shell companies or front businesses to legitimize their illicit funds. These companies might engage in seemingly legitimate transactions, making it difficult to trace the money back to its illegal source.
- Real Estate Investments: Criminals might invest illicit funds in real estate properties to legitimize the money. Real estate transactions can be complex and involve multiple parties, making it harder to trace the origins of the funds.
- Gambling: Criminals might use casinos or online gambling platforms to “clean” their money. They might engage in gambling activities and then cash out their winnings, effectively turning their illicit funds into legitimate winnings.
- Cryptocurrency Transactions: The anonymity and complexity of cryptocurrencies can be exploited for money laundering. Criminals might use digital currencies to transfer funds across borders and obfuscate the transactions.
- Offshore Accounts and Tax Havens: Criminals might move their funds to offshore accounts in countries with strict banking secrecy laws or favorable tax regulations. These accounts can shield the funds from scrutiny and taxation.
- Professional Services Abuse: Criminals might use professionals such as lawyers, accountants, or financial advisors to facilitate money laundering by providing expertise in creating complex financial structures that obscure the true nature of the funds.
- Loan Repayments: Criminals might use illicit funds to repay loans or debts, giving the appearance that the funds are legitimate repayments.
It’s important to note that the methods used for money laundering are continually evolving as criminals adapt to changing regulations and technological advancements. Governments and law enforcement agencies around the world work to combat money laundering through regulatory measures, international cooperation, and enforcement efforts.