The money laundering situation in Guyana: What gives money laundering traction?
Last week the question was tackled: what is money laundering? This week we look at the techniques and circumstances, which give it traction in Guyana and the wider Caricom region. At all levels (global, regional and national), money laundering has been the subject of considerable study in recent years, particularly in the fields of law, economics and finance. Most of these studies have been in response to its explosive worldwide growth and the consequent efforts of various authorities (at all levels) to regulate, and hopefully contain this phenomenon. The studies reveal broad agreement among analysts (and practitioners) that, for analytical purposes, money-laundering can be conveniently categorized as a three-stage process involving placement, layering and integration. Each of these is explained in turn below.
Placement and smurfs
The definition of money laundering presented last week described its goal as seeking to convert “illicit flows of funds” into legitimate ones through placing them into legitimate financial institutions in such a manner that they cannot be traced as the proceeds of crime. This is the most difficult stage in the money laundering process and, as would be expected, involves several complex procedures. To take an example, if the illicit sum to be laundered is large then it must first be broken down into smaller non-traceable amounts so as to avoid attracting attention. This requires multiple transactions.
Usually low-level criminals, (called smurfs) are utilized for this break-down of the funds into smaller amounts. In some instances the task is so huge and tedious that some researchers have labelled it a ‘pre-wash phase’ in the laundering of illicit funds. Readers could infer from this instance that placement involves the physical assembly of the illicit funds, before they are placed into a financial depository. This is required so as not to draw attention to the deposits as they are being made. In several countries an important instrument used in this phase, is the pre-paid money card. This card not only ensures anonymity, but it is also easily transferable within the country as well as easily convertible into other currencies.
After having placed illicit funds into a financial depository, the risk of detection (and its consequences) does not end there. The money-launderers therefore continue to add several layers of transactions onto the initial deposit(s). This is usually accomplished through several wire transfers of the funds in a series of transactions designed to distance the funds from their source (or original deposit). This layering prevents audit trails in …..To continue reading, login or subscribe now.