Money Laundering and its impact in banking industry

Money Laundering (ML) is a global phenomenon with political, economic and social consequences, which impact on the ability of business and societies harmfully. The existence of illegal flows creates economic distortions such as weakening the banking industry, disinvestment of licit economy, loss of attractiveness for Foreign Direct Investment (FDI), erratic use of the resources or promotion of illegal activities. In private domain, there are numerous cases of business seriously vulnerable by ML operations. This paper presents the four stages of money laundering zones such as correspondent banking, private banking, black market peso exchange and cyber laundering which are connected with the ML activities. Then, different money laundering tools and techniques are outlined. This paper explains how the ML activities occur in banking and non-banking industry. Also, some of the recent trends used in name screening and sanction screening for financial institutions are also discussed.