Financial Intelligence Unit

WHAT IS MONEY LAUNDERING

Money laundering is the process by which the proceeds of crime are converted into assets which appear to have a legitimate origin, so that they can be retained permanently or recycled into further criminal enterprises.

On a macro level, whoever controls an economy controls a country. This principle also holds true at other levels. Thus, concomitantly, whoever controls the money in an institution will control that institution. If proceeds of crime are lodged unhindered in financial institutions, criminal could gain major influence over and eventually control such institutions. Likewise, where criminal proceeds are invested in business, legitimate business enterprises may be pushed out of existence. Large scale money laundering has the potential to destabilize financial institutions, financial sectors and entire economies.

The Stages of Money Laundering
There are three stages of money laundering, termed [1] placement, [2] layering, and [3] integration.

Placement is the physical disposal of criminal proceeds. “Disposal” here does not mean to rid oneself of, but to remove from close association with the crime that is the source of the assets so as to appear like legitimately acquired assets. To do this, the criminal must place the proceeds of crime into the financial system, and this may be done through several means.

Layering is the further separation of criminal proceeds from their source through transactions that are designed to disguise the audit trail and provide an appearance of legitimacy. This could involve the movement of funds among accounts, institutions, industries and even countries.

Integration is the stage in which criminal proceeds are treated as legitimate. If placement and layering are successful, integration places the criminal proceeds back into the economy in such a way that they appear to be legitimate funds or assets.

Legal Definition
Section 3 (1) of the Money Laundering (Prevention and Control) Act, 1998-38 defines money laundering thus:

“A person engages in money laundering where

(a) the person engages, directly or indirectly, in a transaction that involves money or other property, that is the proceeds of crime; or

(b) the person receives, possesses, conceals, disposes of, or brings into or sends out of Barbados, any money or other property that is proceeds of crime.”