Term Paper PAD 747

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Money Laundering: Technological Innovations and Cyberspace   :

Money Laundering: Technological Innovations and Cyberspace   Luigjino Kosmaci PAD 747 02

Slide 2:

DEFINITION 1930, the first concept of organized crime and money laundering. Money laundering is the process of concealment or disguise of the true nature, source, location, disposition, and movement of the proceeds of crime. (UNODC, 2004) Cyberspace environment: electronic payments, online banking, online gambling, digital currency

Slide 3:

MONEY LAUNDERING PROCESS Placement Layering Integration

Slide 4:

NEW TREND Technology in facilitating money laundering. Launderers operate under encryption. The circulation of huge amounts in a great distance. No physical contact as everything is done virtually (Welling & Rickman, 1998).

Slide 5:

Chart 1: Trends in expectations of economic crime. Source. PwC, 2014, Global Economic Crime Survey. Available at: http://download.pwc.com/ie/pubs/2014_global_economic_crime_survey.pdf Top 5 for economic crimes

GLOBAL THREAT:

GLOBAL THREAT Lack of awareness Jurisdiction No cash or/and physical circulation of money No records

MONEY LAUNDERING THROUGH CYBERSPACE  :

MONEY LAUNDERING THROUGH CYBERSPACE   Weak rules and regulations. Anonymity. Speed in transactions. Cheaper than before.

MONEY LAUNDERING THROUGH CYBERSPACE:

MONEY LAUNDERING THROUGH CYBERSPACE Different locations No uniform strategies on money laundering Overlap of the traditional stages Globalized market

FINANCIAL SERVICES THROUGH INTERNET:

FINANCIAL SERVICES THROUGH INTERNET Electronic Payments. Mobile payments Micro-payments Stored value cards Digital currencies

FINANCIAL SERVICES THROUGH INTERNET:

FINANCIAL SERVICES THROUGH INTERNET Online Banking Transfers are done quickly Huge amounts to be transferred. E-banking systems include automated teller machine (ATM) transactions; online account opening; internet transactions; and mobile banking.

FINANCIAL SERVICES THROUGH INTERNET:

FINANCIAL SERVICES THROUGH INTERNET Online Gambling $800 billion at 845 casinos in 2003 Online gambling is still unknown No assessments concerning online gambling and money laundering. There are circa 25,000 unregulated gambling websites around the world (McAfee, 2014).

FINANCIAL SERVICES THROUGH INTERNET:

FINANCIAL SERVICES THROUGH INTERNET Digital Currencies No certain value or an exchange rate Specific agreements and rules settled by users Centralized/Decentralized. Privacy and electronic commerce

Bitcoin:

Bitcoin 12 million Bitcoins in April 2014 with total value of slightly more than US $5.5 billion (FATF, 2014). Confidentiality and anonymity No need for formal transaction procedures. February 28, 2013 -> One Bitcoin $33 April 10, 2013 -> One Bitcoin $266 July, 2013 -> One Bircoin $100 (McAfee, 2013)

LAWS AND REGULATIONS:

LAWS AND REGULATIONS The Bank Secrecy Act (1970) The Money Laundering Control Act (1986) Money Laundering Suppression Act (1994) Intelligence Reform & Terrorism Prevention Act (2004)

TRACKING TECHNIQUES AND POLICIES :

TRACKING TECHNIQUES AND POLICIES Limits in electronic routs Reporting programs Oracle program

Slide 16:

INTERNATIONAL ACTIONS AND COOPERATION United Nations Global Program against Money Laundering (GPML) USA has the biggest financial contribution of 70% to the GPML (Chart. 1). Chart 2: States’ contribution on GPML. Source. United Nations Office on Drug and Crime, 2011, In-depth evaluation of the (GPML). Available at: http://www.unodc.org/  

INTERNATIONAL ACTIONS AND COOPERATION:

INTERNATIONAL ACTIONS AND COOPERATION Coordination among all countries Egmont Group GPML has also increased cooperation with World Bank.

CONCLUSIONS:

CONCLUSIONS A challenge to suppress money laundering in cyberspace New innovative techniques and policies against money laundering. A strong cooperation among states and international agencies. Uniform actions Build a common comprehensive language

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