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How the Internal Revenue Service combats money laundering through the use of technological software : 

How the Internal Revenue Service combats money laundering through the use of technological software By: Jenry Cruz, Jr.

Internal Revenue Service(IRS) : 

Internal Revenue Service(IRS) The IRS is a government agency within the Department of Treasury The main goal of the IRS is to encourage tax laws and enforce them to the extent of the law Anyone who don’t pay taxes, it is considered a crime under the law.

Money Laundering : 

Money Laundering Money laundering is a process of disguising the origins of “dirty” money and makes them appear legit. Money Laundering is the result of money obtained from illegal activities such as human trafficking, drug transactions, prostitution and so forth. Each year many criminals find new ways to launder money under the radar

Money Laundering (con’d) : 

Money Laundering (con’d) According to the United Nations Office on Drug and Crime, the worldwide value of laundered money is $500 billion to $1 trillion dollars; could be higher Different ways to launder money: Creation of offshore accounts, Real Estate, and the Banking System

Offshore Accounts:Switzerland and the Cayman Islands : 

Offshore Accounts:Switzerland and the Cayman Islands Most popular countries to launder money is Switzerland and the Cayman Islands. Considered popular because both countries are reluctant to give any personal information on their customers. Cayman Islands has cooperated with the United States in the past on money laundering issues. However, Switzerland stands strong and refuses.

Real Estate : 

Real Estate Real estate is essential because in the past criminals were able to buy real estate property and purchase it with cash; no longer the case The process begins with the criminal buying a house. Afterwards, the property is sold to another individual. Then that other individual certifies that the real estate property was a business transaction. The money launderer gets away because the property now belongs to someone else.

Banking System : 

Banking System Criminals hide their money in the banking system through a process call structuring Structuring is when individuals open multiple bank accounts in different banks to hide their “dirty” money Criminals are clever; have someone else do their bidding The Bank Secrecy Act of 1970 was created in response to combat money laundering in financial institutions

Bank Secrecy Act : 

Bank Secrecy Act The Bank Secrecy Act of 1970 has enacted new laws to help report the suspicion of money laundering. The Act proposed to “protect against international terrorism” by mandating the creation of a paper trail of financial records for any transaction involving large amounts of currency The Bank Secret Act is responsible for the creation of the Currency Transaction Report and the Suspicious Activity Report. Both are technological instruments used by the IRS in combating financial crimes

Currency Transaction Report (CTR) : 

Currency Transaction Report (CTR) The Bank Secrecy Act forces financial institutions to file a Currency Transaction Report (CTR) for each deposit, withdrawal, exchange of currency or other payment or transfer, to such financial institution which involves a transaction in currency of more than $10,000

Suspicious Activity Report (SAR) : 

Suspicious Activity Report (SAR) The SAR is a generated report that deals with "any suspicious transaction relevant to a possible violation of law or regulation” An example of a suspicious activity can be if an underage minor comes to a financial institution with a deposit of $11,000.00 in cash. This will be considered “suspicious” because minors do not carry this much cash.

Teller Express : 

Teller Express Teller Express is a systematic software found in all financial institutions. The program inputs every deposit, withdrawal, payment and other transactions made by an individual. Teller Express has been a profound software for the investigations in crimes because the software stores data such as dates, time, and/or location. The software also tracks money being shifted through a person’s account. When CTR or SAR is filed it is formatted through the Teller Express software

Data Mining : 

Data Mining Data mining is also another software use to combat money laundering. Data mining is a tool designed to analyze large data sets & rapidly discovers “hidden or “buried” relationships among the data Different techniques used in data mining; linear regression model

Linear Regression : 

Linear Regression Linear regression model is designed to examine the relationships between variables. The linear regression summarizes the data and then it is used for prediction purposes. “Prediction” often leads investigators to an almost accurate day and time an activity can occur on a person’s account

Conclusion : 

Conclusion Money laundering continues to be a global problem. Many government agencies are working together to solve these issues. Through technology, government agencies can have the advantage. “One step Closer…”

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