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Money Laundering: A Global Threat and the International Community's Response

NCJ Number
FBI Law Enforcement Bulletin Volume: 70 Issue: 5 Dated: May 2001 Pages: 1-9
William R. Schroeder
Date Published
May 2001
9 pages
This article discusses the global threat of money laundering and what is required for the international community to counter it.
Generally, money laundering is "the process by which one conceals the existence, illegal source, or illegal application of income and then disguises that income to make it appear legitimate." The three-stage process of money laundering first involves the placement of proceeds derived from illegal activities from the scene of the crime to a place or into a form less suspicious and more convenient for the criminal. "Layering" constitutes the second stage of the laundering process and involves the separation of proceeds from the illegal source through the use of complex transactions designed to obscure the audit trail and hide the proceeds. "Integration," the third stage of money laundering, consists of the conversion of illegal proceeds into apparently legitimate business earnings through normal financial or commercial operations. Money laundering has become a global problem due to the confluence of the growth in international trade, the expansion in international trade, the expansion of the global financial system, the lowering of barriers to international travel, and the surge in the internationalization of organized crime. Efforts by governments to address money laundering have been ongoing for over 10 years. The international response to laundering has taken a number of forms, including multilateral treaties, regional agreements, international organizations, and the identification of universal counterlaundering measures. This article concludes with an overview of the United States' response to global money laundering, the anti-money-laundering provisions of the 1988 Vienna Convention and the Strasbourg Convention of 1990, and the Financial Action Task Force recommendations (a task force established by the governments of the Group of Seven). 43 notes