A Research Proposal On Money Laundering Finance Essay

The intent of the survey concerned the impact of money laundering and its effects on the local economic and method of washing technique in Mauritius. Money Laundering is really huge in nature ; it consists of assorted stairss, technique and attack of set abouting such improper activity. The research analyzes the economic effects of Money laundering in the Mauritanian Economic. The research work will try to analyze the money laundering activities and the utility of bar and sensing techniques by local companies. The method that is to be used is chiefly analyzing available research documents so that we get a upper limit of information. The intent of this survey is to supply the general populace a wide thought on money laundering with some existed solutions. The research will be in the chief involvement of fiscal establishment, Government and General Public.

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2.0 Literature Review

2.1 What is Money Laundering?

Money laundering is the procedure by which money is obtained illicitly. Assorted types of frauds corruptness, cooking the books, involve money which has been preceded by several condemnable Acts of the Apostless. Individual or groups make illegal additions by transporting out these condemnable Acts of the Apostless and frequently swindle high sums.

Money laundering makes it possible to legalize dirty additions through computing machine offenses, insider trading, and graft where these bring forth big sums of net incomes. Money washing takes topographic point within all types of profit-motivated offense, such as peculation, fraud, embezzlement, corruptness, robbery, distribution of narcotic drugs, and trafficking in human existences ( Okokrim, 2008 ) .

2.2 Features of Money Washing

Money Washing consists of a series of assorted minutess used to alter the beginning of fiscal assets so as these assets can be used without compromising the felon ‘s offenses. These minutess involve 3 phases ( Billy Steel ) :

2.2.1 Placement

The first phase refers to the physical distribution of fiscal assets. It is the most unsafe one for the perpetuators as the money from illicit activities are introduces into the fiscal system. Money laundering is a ‘cash intensive ‘ concern bring forthing immense sum of hard currency from improper activities ( for illustration street drug dealing, where payment are made in hard currency ) . The returns are so topographic point into fiscal establishments, in the retail economic system or deposits out of the state. The chief purpose of the launder is to intentionally take the hard currency from the location of acquisition and to change over it into other assets so as to forestall sensing from governments.

2.2.2 Layering

Layering involves making complex beds of fiscal dealing designed to cover audit dress suits and supply secretiveness. The first effort is to mask the beginning and ownership of the financess by making complex beds of dealing. The thought of the dealing is to dissociate the illegal financess to the beginning of the offense. Layering is the 2nd phase, in which the financess are moved so as to veil or take any whatsoever link from the offense committed to obtain the money.

During the layering procedure, a figure of histories, fiscal establishments, companies, financess every bit good as the usage of professionals such as agents, attorneies and advisers as mediators could be involvedA as this is where the money will be channelled. Assetss that are bought through improper financess can be resold locally or abroad and as a consequence, the assets become more hard to map out and prehend.

2.2.3 Integration

The concluding phase consists of the integrating of the money in the legitimate economic and fiscal establishment. Integration is the phase whereby takes topographic point the creative activity of a legitimate footing for the plus beginning. The launder make the money appear lawfully earned and ‘cleaned ‘ . At this phase it is really hard to separate by governments the difference between legal and illegal wealth. The money is viewed as being legal, and the felon can utilize it for any intent. Illicit money is frequently removed from its state of beginning to be cycled through the international payment system so as to film over any audit trait ( Joyce, 2005 ) .

There are different ways in which the 3rd phase of money laundering is done. For illustration, a recognition card might be handed out by seaward Bankss, casino “ winning ” can be cashed out, capital additions on option, and stock trading might follow, and existent estate sale might take to gain. The returns of condemnable Acts of the Apostless could be generated from organized offense such as drug trafficking, people smuggling, people trafficking, returns from robberies or money acquired by peculation, revenue enhancement equivocation, fraud, maltreatment of company constructions, insider trading, or corruptness.

Popular Methods of the launders at this portion of the game is

Sending bogus import – export bills and overestimating the monetary value of the goods. Consequently in allows the launders to more the financess from one company or state to another with the bills functioning as beginning of the capital topographic point with fiscal companies.

A simpler technique is to switch the money ( via EFT ) to a rightful bank from a bank owned by the launderers, as ‘off the shelf Bankss ‘ are easy purchased in many revenue enhancement oasiss.

The constitution of unspecified company in states where the right to concealment is guaranteed. In such instance the launderer is in a place to allow loans from Bankss to set about certain future legal dealing. In add-on launders can claim revenue enhancement alleviation on loan refunds and involvement on loan so as to increase their net incomes.

Most condemnable Acts of the Apostless are motivated by net income, argues Financial Intelligence Unit ( 2008 ) . When significant net incomes are generated from offense, culprits have to invent a agencies to command the assets in such a manner that they do non pull attending to themselves or the offense committed. Therefore, the money laundering procedure is important in order to bask the net income without eliciting intuition.

2.3 Problem statement:

2.3.1 Banking Secrecy: A major drawback of money laundering

Banking secretiveness is a professional duty, intending that fiscal establishments shall non expose a client ‘s fiscal information and they even have the right to defy any 3rd party ‘s questions in order to protect the client ‘s well-being. Secrecy Torahs have served to safeguard individuals from fiscal failure in states plagued by ricketiness, delicate currency and run-away rising prices rate. Affluent persons and political agents are besides protected by leting them to conceal their ownerships to avoid the hazard of persecution ( Savona, E.U, 1997 ) .

In some states, for illustration in Switzerland, the disclosure of secret banking information is punishable by jurisprudence, whether it is knowing or unwilled ( Corrado, M.G, 1988 ) .

In the universe we are soon populating, cipher can deny the fact that banking secretiveness is the most important arm for money launderers. Some states like Hong Kong, Switzerland, Panama are even known as ill-famed ‘banking secretiveness celestial spheres ‘ . These legal powers truly do the offense of money washing more terrible and out of control. For case in Hong Kong, a new ordinance was introduced in 2000 which requires Bankss to describe leery minutess. This resulted in 6,100 leery minutess being reported in 2000 and 95 % of them were from Bankss ( www.hongkong.org/press/ny-021400.htm, 15th Aug 2001 )

2.4 Battling Money Laundering: The Lifting of Banking Secrecy

Despite being an of import portion of single privateness, banking secretiveness has to be lifted in some instances as it is every bit of import to contend against money laundering in order to vouch a protected and safe society. The lifting of bank secretiveness has already been embodied in the most critical international paperss. Each party should authorise the tribunal or other authorization to order that fiscal or concern studies should be made accessible or be seized under the 1988 Vienna UN Convention, the 1990 Strasbourg Convention and the 2000 Palermo US Convention specifically.

The FATF recommended that fiscal establishments should concentrate on all unusual or big minutess, which have no apparent economic or lawful intent. Such minutess should be examined, written and be made available to supervisors, hearers and jurisprudence enforcement bureaus. If fiscal establishments uncertainty that proceeds come from a condemnable activity, they are required to account for their intuitions to the expert governments without hold ( The FATF Recommendations on Money Laundering, 1996 Art 14, 15 ) .

These steps are advanced, modern and highly different from the conventional banking system. In early times, the relationship between fiscal establishments and clients were founded on trust and assurance: neither the banker asked inquiries nor the clients made revelations. The state of affairs has now changed. Along with that, the manner of thought and attitude of bank managers, staff and that of direction governments have changed ( Galvao G, 1997 ) .

3.0 Research Methodology

3.1 Purposes and Objective of the research

The purpose of the research is to place grounds of banking secretiveness and their effectivity in battling money laundering. Cases of money laundering in Mauritius will be studied and analysed. Cardinal rules from the anti-money laundering act and from ordinances imposed by bank regulators ( e.g. Financial Services Commission and the Bank of Mauritius ) will be outlined. The survey will so research on the steps taken by Bankss to contend against possible instances of money laundering in order to vouch a protected and safe banking service. The lifting of bank secretiveness has already been embodied in the most critical international paperss. The aims of this research are to:

3.2 Research Method

A study with a self-administered questionnaire will be the informations aggregation technique used. The questionnaires will be sent to the senior directors, executives and subdivision directors of the identified Bankss in Mauritius. Visits to the company/meeting with the relevant individual will be carried out where necessary to guarantee maximal response and that questionnaire is being filled up by the addressee.

Besides, secondary informations will be taken from company web sites, studies and fiscal statement to supplement research.

3.3 Statistical Analysis of informations

After the questionnaire, the response will be input as informations so as to do usage of specific statistical technique. Thus SPSS statistical bundle will be used to analyse informations for the findings of the research.

3.4 Benefits of the Research

The research will be good to:



Future Research Dissertations

3.4.1 Companies

Battling money laundering will hold a positive impact on companies:

Through incorporate direction of fiscal offense operational efficiencies will better

The hazard of corruptness, individuality offense and other condemnable offenses will cut down well

Reduced fiscal hazard, reputational hazard and legal hazard

Bad debts and fraud losingss due to client fullness

3.4.2 Government

Money laundering has a negative consequence on the economic system, such as loss of control on the economical policy, economic deformation and instability. Furthermore, authorities loss gross as revenue enhancement aggregation becomes more complicated and confounding. Therefore, the research will assist to cut down these drawbacks.

3.4.3 Further Research

Research will help other research workers to do farther research in the subject.

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