Australia: Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (AML/CTF Act)

AML/CTF laws and regulations require businesses to put in controls to make it harder for them to be used to launder money. When they are or suspect they are being used to launder money must report it to the authorities. 

AML refers to preventing criminals from disguising illegally obtained funds as legitimate income, and combating the finance of terrorism.

The Money Laundering Process 

Money laundering is not a single act it is accomplished in three basic steps. These steps can be at the same time in a single transaction, they can also appear in well separable forms one by one. Traditionally the money laundering process comprises three main stages: 

1. Placement - Goal - Deposit Criminal proceeds into Financial System

• Placing, deposits into traditional financial institutions.

• Into bank accounts transferred and manipulated easier. 

• First stage in washing cycle 

• Remove the cash from the location of acquisition 

• Avoid detection from authorities 

• Transform to travellers cheques, postal orders 

2. Layering - Goal – Conceal the Criminal origin of the proceeds 

• Separating proceeds through many techniques 

• Use multiple banks, accounts, professionals, corporations, trusts 

• Convert cash into traveller’s cheques, money orders, wire transfers, letters of credit, stocks, bonds, or purchasing valuable assets, art or jewellery 

• Disguise the audit trail \ anonymity. 

• Confuse criminal investigation 

• Moving funds through offshore bank accounts shell companies via EFT transfers 

• Little information on transfers 

• Complex dealings stock, commodity and futures brokers. 

• Sheer volume of daily transactions, anonymity chances of tracing is insignificant.

3. Integration – Goal Create an apparent legal origin for Criminal proceeds 

• Final stage of the process 

• Reintroduced into the legitimate economy from a legitimate source 

• Assimilated with all other assets in the system 

• Integration “cleaned” money to appear legally earned. 

• Exceedingly difficult to distinguish legal and illegal wealth. 

Business that are ideal for laundering cash 

Certain businesses that have high levels of cash are ideal for laundering cash: