THEORIES OF GOBAIZATION

TEHREEM FAYYAZ (02-111172-126)

Quiz # 3

What is money laundering define it in your own words? What steps are taken by the criminals to hide
the source of money? In your opinion what steps should be taken to reduce this global issue?

Money Laundering is the process of illegally acquiring money and then concealing it. It involves
drug trafficking, terrorist financing, smuggling of goods etc. Criminals take the following steps
in order to hide the source of money:
 Placement: It is the first stage of money laundering. This is where the placement of
money starts that the money is placed in circulation through financial institutions. This
involves smuggling, making illegal tranactions through a known banker and currency
exchanges.
 Layering: This is the second stage of money laundering and involves the concealment of
money source. Due to this stage, authourities find it difficult to trace the source and
transactions behind illegal money. This involves buying assets, concealing assets, bring
money into the system through other individual’s accounts.
 Integration: This is the third phase where laundered money is brought into the system as
inflow. In this phase, the criminal uses the money as if it is legal, for whatever purpose
they want.

Steps that should be taken to reduce this global issue are:

 Assets confiscating process: The assets of politicians or common individuals that are
found involved in money laundering should be confiscated.
 Due diligence: Anonymous accounts or accounts in false names shouldn’t be kept in
banks and other financial institutions.
 Record-keeping: Banks and other financial institutions are required to keep a record of
transactions so assets and other transfers made can be traced back whenever required as
part of investigation by authorities.

( 20 minutes)

naveedmuna@gmail.com