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Money laundering is the process of illegally concealing the origin of money obtained from illicit activities (often known as dirty money) such as drug trafficking, underground sex work, terrorism, corruption, embezzlement, and treason, and converting the funds into a seemingly legitimate source, usually through a front organization.
The Financial Action Task Force on Money Laundering (FATF), which is recognized as the international standard setter for Anti-money Laundering (AML) efforts, defines the term "money laundering" briefly as "the processing of criminal proceeds to disguise their illegal origin" in order to "legitimize" the ill-gotten gains of crime.
Anti–money laundering (AML) refers to a set of policies and practices to ensure that financial institutions and other regulated entities prevent, detect, and report financial crime and especially money laundering activities. Anti–money laundering is often paired with combating the financing of terrorism, using the initialism AML/CFT.
Within these groups, there may be further sub-specializations: some forensic accountants may, for example, specialize in insurance claims, personal injury claims, fraud, anti-money-laundering, construction, [10] or royalty audits. [11] Forensic accounting used in large companies is sometimes called financial forensics.
The term "money laundering" dates back to the days of Al Capone; money laundering has since been used to describe any scheme by which the true origin of funds is hidden or concealed. Money laundering is the process by which large amounts of illegally obtained money (from drug trafficking, terrorist activity or other serious crimes) is given the ...
The heads of Financial Intelligence Units (FIUs) around the world play crucial roles in combating financial crime, including money laundering, terrorist financing, and fraud. FIUs are typically national agencies responsible for collecting, analyzing, and disseminating financial intelligence to combat these issues.
Forensic accountants need to have a great deal of access to information regarding the company they are investigating or assisting. The information will determine how much a person actually makes, the worth of a business, if there has been fraudulent activity, who committed the fraud, everyone involved, how much was taken from the company, where the money went, and how much can be recovered.
The Anti-Money Laundering Improvement Act established national and international policies to prevent and combat money laundering and terrorist financing. [1]It protects the integrity of financial institutions by detecting money laundering activities, which involve converting illegally obtained funds into legitimate assets through complex transactions and disguising the proceeds as lawful funds.