Money laundering and terrorist financing
Money laundering is the illegal process of making large amounts of money generated by a criminal activity appear to have come from a legitimate source. The money from the criminal activity is considered dirty, and the process “launders” it to make it look clean.
The combat against money laundering seeks to deprive criminals of the profits from their illegal enterprises, thus eliminating the main motivation for them to engage in such activities. Illegal and dangerous activities, such as drug trafficking, people smuggling, terrorism funding, smuggling, extortion and fraud, endanger millions of people globally and impose tremendous social and economic costs upon society. As the proceeds of such activities are legitimised by money laundering, combating money laundering may result in a reduction in criminal activity and hence a significant benefit to society.
Terrorist financing is closely related to money laundering. Terrorist financing involves the solicitation, collection or provision of funds with the intention that they may be used to support terrorist acts or organizations. Different to money laundering however, the source of the funds is largely irrelevant. The primary goal of individuals or entities involved in the financing of terrorism is therefore not necessarily to conceal the sources of the money but to conceal both the funding activity and the nature of the funded activity. The sources of terrorist funds will often be of an illegal nature however. The combat against terrorist financing consists of a set of government laws, regulations, and other practices that are intended to restrict access to funding and financial services for those whom the government designates as terrorists. By tracking down the source of the funds that support terrorist activities, law enforcement may be able to prevent some of those activities from occurring.