Money laundering is the act of disguising the source and control of funds derived from criminal or illegal activities by investing in legitimate businesses or through bank transfers, purchase of stocks or insurance policies etc. Money laundering has been traced back to early Chinese civilization by Historian Sterling Seagrave.
He writes that 2000 years before Christ, wealthy Chinese merchants were known to hide their wealth for fear of it being confiscated by rulers. The merchants would then re-invest their wealth in businesses in remote provinces of China.
Typically, money laundering involves several transactions used to hide the source of financial assets such that they can be used by criminals without risk of exposing their activities. John McDowell and Gary Novis of the Bureau of International Narcotics and Law Enforcement affairs, US Department of State, describe three stages in which money laundering typically takes place.
(1) It starts off with the transfer of assets into financial institutions through deposits, electronic transfers etc.
(2) Layering – a series of complex financial transactions used to dissociate the assets from their source and lastly,
(3) Integration through seeming legitimate investments or activities.
With time, it has evolved into quite a sophisticated industry. Advances in technology make it possible for criminals to move the proceeds of crime in the most imaginative ways. It appears to be advancing much quicker than tactics installed to check it, posing a problem for the agencies and institutions responsible for dealing with it.
Though it is common knowledge that money laundering poses a problem to economic development, little evidence is available on the impact on the economy of a country. Available information tends to focus on the extent of the activity and its impact on a global scale. The next few articles will attempt to outline the impact of money laundering on Nigeria as a single economy, therefore adding to the body of knowledge on the topic.
 Morris-Cotterhill, N. 1999. Money Laundering, Risk Management and Compliance. [Online]. Available at: http://www.countermoneylaundering.com/public/content/brief-history-money-laundering
 McDowell, J and Novis, G. (2001) ‘The consequences of money laundering and financial crime’. Electronic Journal of US Department of State, 69(2), pp. 7-8
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