Money Laundering is an act that has appeared since ancient times. However, over time, this behavior becomes more and more sophisticated. Especially in recent years, money laundering activities are taking place very unpredictably.
So what exactly is money laundering? What are the consequences of money laundering? How long could you be charged with money laundering?
Let’s figure out through this article!
Table of Contents
What is money laundering?
Money Laundering is an illegal activity to turn money collected from illegal business and investment activities into money from legitimate source. This avoids the prosecution of the current law.
The source of illegal money can be revenue from embezzlement, corruption or deprivation of assets, etc. However, in order not to reveal their behavior, they have carried out money laundering.
Being “laundered”, the source of the illegal money will be hidden, from which they use the proceeds for daily economic activities that the investigative agency cannot know.
See also: What is credit risk? What are the causes and consequences
Who can make money laundering activities?
Money laundering often occurs in certain crimes. Accordingly, the most common objects would be:
- Terrorist organizations
- Individuals embezzlement, corruption
- Individuals and organizations who want to avoid taxes and keep their income secret from the law
- People who do illegal business such as smuggling drugs, weapons, illegal labor
Of course, these groups doing money laundering not only operate independently but sometimes also cooperate with others or even an individual can simultaneously perform the above tasks to find illegal sources of money.
Stages of the Money Laundering Process
To successfully launder money and avoid legal scrutiny, the money laundering process needs to go through different stages, namely:
- Stage 1: Placement
- Stage 2: Layering
- Stage 3: Integration
Placement
Placement is the stage where money launderers will seek to get dirty money into circulation in the legitimate financial system. Commonly used ways to do this are:
- Spliting the deposit into many different banks so as not to be checked and declared.
- Buying goods and products that are expensive but are not really worth it.
- Transfering money abroad without declaration.
Layering
After the illegal money has been introduced into the financial system, the next thing is to distribute this money source into business activities and invest according to the law to create complicated and difficult-to-trace transactions.
Common ways such as:
- Transfer money overseas
- Deposit money in domestic banks
- Investing in business activities, real estate projects, construction or buying securities, etc.
Integration
After the dirty money has been put into legal circulation and completely cleaned, the next thing is to integrate that money source in a variety of ways such as:
- Buying property, house, real estate, car.
- Investing in a personal business, finance, etc.
What are the consequences of money laundering?
Money laundering brings seriously negative impacts on the economy and society of a country, include:
- Wasting of economic resources
- Distorting the distribution of economic resources of society
- Causing serious distortions in the synthesis of economic statistics
- Creating inequality in income distribution
- Affecting the credit of the financial market
- Causing a sudden change in the demand for money
- Influencing directly on the exchange rate
- Causing the imbalance in investment
- Slowing economic growth
In addition, experts have confirmed that “money laundering” can be considered a type of crime. It can cause a country’s economy to decline rapidly. Above all, it can also turn into economic achievements that have contributed to the development of a severely devastated country.
How many years in prison can the crime of money laundering be charged?
According to [REPUBLIC ACT NO. 9160]
SEC. 14. Penal Provisions. — (a) Penalties for the Crime of Money Laundering. The penalty of imprisonment ranging from seven (7) to fourteen (14) years and a fine of not less than Three million Philippine pesos (Php3,000,000.00) but not more than twice the value of the monetary instrument or property involved in the offense, shall be imposed upon a person convicted under Section 4(a) of this Act.
The penalty of imprisonment from four (4) to seven (7) years and a fine of not less than One million five hundred thousand Philippine pesos (Php1,500,000.00) but not more than Three million Philippine pesos (Php3,000,000.00), shall be imposed upon a person convicted under Section 4(b) of this Act.
The penalty of imprisonment from six (6) months to four (4) years or a fine of not less than One hundred thousand Philippine pesos (Php100,000.00) but not more than Five hundred thousand Philippine pesos (Php500,000.00), or both, shall be imposed on a person convicted under Section 4(c) of this Act.
(b) Penalties for Failure to Keep Records. The penalty of imprisonment from six (6) months to one (1) year or a fine of not less than One hundred thousand Philippine pesos (Php100,000.00) but not more than Five hundred thousand Philippine pesos (Php500,000.00), or both, shall be imposed on a person convicted under Section 9(b) of this Act.
(c) Malicious Reporting. Any person who, with malice, or in bad faith, report or files a completely unwarranted or false information relative to money laundering transaction against any person shall be subject to a penalty of six (6) months to four (4) years imprisonment and a fine of not less than One hundred thousand Philippine pesos (Php100,000.00) but not more than Five hundred thousand Philippine pesos (Php500,000.00), at the discretion of the court: Provided, That the offender is not entitled to avail the benefits of the Probation Law.
Conclusion
I has just explained what money laundering is and other related information. You can see that money laundering is an activity worthy of condemnation. So from now on, let’s join the government to contribute to combating “money laundering”.
See also: What is settlement? Differentiate other settlement maturity?
