Laundering Money: Why? 

The financial services industry has made tremendous progress in money laundering detection and prevention during the last few years. However, they remain susceptible to abuse by criminal groups for laundering unlawfully acquired income and cash intended to fuel terrorist actions. In addition, the financial services industry will face reputational hazards, which might result in difficulty obtaining money at competitive rates and the loss of investor and consumer confidence, resulting in missed business opportunities.

Understanding the criteria of a money launderer listed in the Anti-Money Laundering Act (AMLA) would make it easier to detect launderers. But, it’s also important to understand the causes of money laundering to minimize laundering cases. Knowing the motives and methods behind money laundering, financial institutions can develop effective AML policies and procedures to prevent dirty money from entering the legitimate financial system. Moreover, understanding the causes of money laundering can help businesses identify potential red flags that may signal these illegal activities.

Some of the common causes of money laundering listed in the AMLA include a money launder’s need to conceal the source and ownership of illegal funds, the lure of profits and the desire to use ill-gotten funds without fear of being caught, vulnerabilities in (or complete lack of) regulatory frameworks and enforcement mechanisms, fragmented and inconsistent AMLA regulations and standards across jurisdictions, globalisation and the ease of cross-border transactions.

Besides that, high levels of corruption and lack of transparency in some jurisdictions, inadequate resources and capacity of law enforcement agencies to investigate and prosecute money laundering cases, insufficient international cooperation and coordination among law enforcement agencies and inadequate awareness and understanding of the risks of money laundering among businesses and individuals also contribute to money laundering occurrence.

I would classify launderers into two (2) categories:

1. Launder Money To Fulfil Own Needs 

The first category refers to individuals who commit illegal acts and launder their own money due to their necessity. Individuals who commit underlying offences and launder their own money – do so out of necessity. When their successful illegal transaction, which generates money, is used for their use, the money is criminalized as money laundering. The only way they can stop laundering is to stop their underlying criminal activity. The launderers of this category cannot be detected by anti-money laundering measures only where anti-money launderers must focus on undermining the motive for the underlying illegal activity and not only the laundering activity. This action would help to influence the choices and behaviours of launderers of category A. I am sure we can achieve that by creating a solid likelihood that every acquisition crime will fail by being detected and end in the total and permanent confiscation of all gains. 

2. Launder Own Money And Launder The Gain From Money Laundering

Some launderers launder their own money and the gains of money laundering. This kind of launderer can be considered as wanting to be respected. Their desire to continue laundering money shows their passion and need to live a good life. Whether legal or illegal, launderers’ priority has shifted to living a good life in any way. Quoting Abraham Maslow’s Hierarchy of Needs, a human being is exposed to love, acceptance and the need for self-esteem and the esteem of others. These launderers assist others by helping them gain profit illegally. This shows that they want to be needed and respected.


About the Author:   

Programme Leader cum Lecturer, Faculty of Business, Accountancy & Law (FoBAL), SEGi College Penang 

Fairuza binti Hajimia, an experienced industrial practitioner, has worked with various industrial companies and dedicated over a decade to the education industry. Before joining the SEGi family, she actively participated in numerous industrial and educational institutions. Currently pursuing a PhD in Forensic Accounting, with a specific focus on money laundering, Fairuza is actively engaged in academic endeavours. Alongside her scholarly pursuits, she actively participates in direct selling and social activities. Known for her easy-going nature, enthusiasm, and innovative teaching methods, Fairuza creates an engaging and conducive learning environment for her students. In her current role, she imparts her knowledge to diploma and degree students, leaving a positive impact on their educational journey. Fairuza’s involvement extends to the international stage, where she has presented papers at both national and international conferences. 




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