Essay on Money Laundering: Destructive Risk to State, Banks and Community

Introduction

A corrosive result of countries' economy is as a result of money laundering. Departments of the state and government law enforcement agencies are majorly affected by money laundering(Mollencarp, 2020). Depth of destruction as a result of money laundering disrupts business flow running risks of financial responsibilities and burdens by banks consequences of money laundering include exposure to the entire community brought by criminal traits persons ruthlessly subjected to laundry.

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HSBC bank came under the spotlight in early 2019. These were when the united nation of America senate report proved that it was majorly involved in the laundering of about 10 billion dollars. The entire bank violated already established laws where it portrayed the problem of offering services provided by banks to clients of a specified nationality where it had links with terrorists (Mollencarp, 2020). The bank also failed to handle its counterparts in Mexico as a threat despite links with drug lords and traffickers.

The fate of key players

Key players involved in money laundering were the bank itself; hence a considerable fine was imposed in HSBC bank. Financed terrorists directly attacked the legitimate private sector; therefore, the bank charged with violation of outlined sanction laws by conducting business with clients in Sudan, Iran, and Cuba(Mollencarp, 2020). Top management of HSBC bank during money laundering held responsible hence replacement in their positions.

An agreement of about four to five years, an agreement to have a purely independent monitor agreed upon.it would help the bank evaluate its time to time progress and rating hence improving its competence and compliance(Reuter, 2017). A global review of banks overhaul in its control has been launched by all bank stakeholders as a result of the initial money laundering process. These files help in ensuring no unwitting action on conduits to suspected criminal funds.

The mechanism causing money laundering in banks

Mechanics of money laundering indicates terrorists use money from laundering for funding strikes against speculated American enemies together with their allies. Terrorist organizations have the confidence that this act will affect the economy of a country and the internal and external financial stability(Reuter,2017). Intrusion on the economy affects the entire globe regarding the integrity of economic frameworks and available markets.

It is migrating schemes using available money laundering tools done through readily available charitable organizations, filtering of the available funds through both legal and illegal businesses. This outlined measure aids these terrorists in evading inquiry from responsible authorities from the united states of America(Reuter, 2017). Source of cash flow is the core element of legitimate and illegitimate acquired money. It appears as an attempt to prevent terrorist organizations from profiling or flagging.

Examples in a case study

In late 2018 and early 2019, HSBC bank, a British bank with about 100 branches, was accused and pleaded guilty according to the bank's chairman. Charges alleged liable to was falsifying records of the business after it discovered to have violated the united states of America sanctions(Reuter, 2017). These sanctions were against several countries linked to aiding terrorist activities and included Sudan, Iran, and Cuba.

A fine of about 10 billion dollars was to pay. This fine was reportedly and allegedly classified as one of the highest penalties ever placed for violation of outlined sanctions. The described case is an appropriate example of illegal disbursement on already existing sanctions in Sudan strictly bounded by the united states of America embargo(Chen et al.,2018). Human rights directly violated where aiding of terrorists by specified nation example Sudan is involved.

Solutions to money laundering in banks

A multitude of ways are applicable in dealing with money laundering in banks and include detecting communication sources and technological types frequently used. Money movement is critical but more involved hence imperative in forensic evaluation to progress quickly. Therefore, any internet transfer collections and usage of cell phones involved in money laundering should be accurately tracked down(Chen et al.,2018). These should be carried out fast enough before destruction by disposing of these devices is achieved.

Laundered money tracking is also an efficient solution in dealing with the entire problem. It helps in tracking the generation of cash flow transfer and control hence providing information on terrorism occurrence(Chen et al.,2018). Knowing detailed information in the event of the illegal act, it will aid in the tracing process of determining origin. Resources have to be readily available, unrestricted, and also vibrant.

Unsolved aspects of the problem

A more complex fraud scheme and financial crime majorly involve a mixture of legal and illegal activities. Due to this reason, it is challenging to differentiate between legal and legitimate and also detection of activities, which are a result of fraud. The more confusing part is that money has completely laundered, leaving no trace hence appearing as legit(Chen et al., 2018). Collaboration of already trusted fraud-free organizations with drug traffickers and also terrorist associated nations make it hard for solving the already existing problem.

Preventive measures for money laundry in banks

To achieve success, in preventing occurrences of money laundering, activities in the future, a comprehensive and inclusive plan has to put in place. This measure tends to consider specific requirements constituting valuable, essential, and reliable steps towards money laundering and widespread corruption cases involved(Chen et al.,2018). Global networking system where different nations work together towards achieving the same goal in a dedicated manner hence achieving anti laundry objective.

References

Chen, Z., Teoh, E. N., Nazir, A., Karuppiah, E. K., & Lam, K. S. (2018). Machine learning techniques for anti-money laundering (AML) solutions in suspicious transaction detection: a review. Knowledge and Information Systems, 57(2), 245-285.

mollencarp, c. (2020). Retrieved 12 February 2020, from https://www.reuters.com/article/us-hsbc-compliance-delaware/special-report-hsbcs-money-laundering-crackdown-riddled-with-lapses-idUReuter, P. (2017). Illicit financial flows and governance: The importance of disaggregation. World Bank.