In this world, there are two types of businesses – legitimate and illegitimate.
A legitimate business is when the proprietor sets up a business using legitimate funds such as bank loans, borrowing from families or friends.
The other type of business is an illegitimate business which is front to launder money.
Most of these monies in illegitimate businessess are obtained from ill-gotten gains such as theft, embezzlement or just obtained illegally.
For example, a crooked politician or chief executive officer would ‘steal’ or misappropriate the money but cannot keep it in a bank for obvious reasons.
A chief executive officer or politician with a huge amount of money in his or her account would raise red flags.
So what does the money launderer do?
He or she would “clean” up the money by setting up a new business.
Launderers sometimes invest in existing businesses too and become shareholders.
In the movie The Godfather, the mafia laundered their money which was illegally amassed over time by investing in car workshops, barbers, restaurants and so many others.
The mafia earned their money via extortion, prostitution, gambling, bootleg and even murder.
The dirty money is then reinvested to make it legal and undetected.
In this way, the authorities cannot easily detect the stolen money.
In most countries, Malaysia included, money movement is highly regulated and monitored as a measure to curb money laundering.
Bank Negara Malaysia monitors the movement of huge sums of money going in and going out of the country.
Huge denominations of RM1,000 and RM500 are also prohibited to control money laundering.
Bank Negara Malaysia also monitors huge money transactions conducted online as the illegal money could, among other things, also be used to fund terrorism activities.
Malaysia also has the Anti-Money Laundering Act which will prosecute felons to the full extent of the law.
CEOs, politicians, government officers and some segments of the rakyat have been arrested and convicted of money laundering under this Act which is also known as AMLA.
We see many individuals hauled up to court by the Malaysian Anti Corruption Commission and/or Bank Negara Malaysia (depending on the most appropriate provisions of the various Acts to be applied) for money laundering.
Sadly, some of them are young and even underaged.
In the United States, the Department of Justice is really serious about nabbing money launderers.
In the case of fugitive Jho Low, his assets in the US were seized by the Department of Justice.
The assets included properties, paintings, money, a yacht and so many others.
This is because the ill-gotten money obtained by Jho Low is stolen from 1Malaysia Development Bhd which is then laundered in the US.
The US Department of Justice is the anti-laundering capital of the world.
According to PwC’s Global Economic Crime Survey 2016, global money laundering transactions are estimated to amount to two to five per cent of the global gross domestic product, or roughly US$1 trillion to US$2 trillion annually.
What can we do as a society to instil the message to our youths that money laundering is wrong?
What we can do is to nurture them from a young age on financial literacy and teach them about money markets.
Parents can educate them that money can be used to make our lives better.
But parents should tell the youths that money can also be misused and abused such as through money laundering activities.
Thus the onus is up to parents to nurture their young on money laundering and its consequences which would land them in jail.