A Research Proposal On Money Laundering Finance Essay

A Research Proposal On Money make clean Finance EssayThe intent of the study concerned the impact of currency clean and its effects on the local economic and method acting of clean technique in Mauritius. Money Laundering is very vast in nature it consists of various steps, technique and approach of undertaking such unlawful activity. The research analyzes the economic effects of Money launder in the Mauritian Economic. The research work will onset to examine the capital launder activities and the usefulness of prevention and detection techniques by local companies. The method that is to be used is mainly studying available research papers so that we get a maximum of breeding. The purpose of this study is to provide the familiar public a broad idea on capital laundering with some existed solutions. The research will be in the main interest of financial institution, Government and General Public.2.0 Literature Review2.1 What is Money Laundering?Money laundering is the pro cess by which money is obtained illegally. Various types of frauds corruption, cooking the books, involve money which has been preceded by several criminal acts. Individual or groups make illegal gains by carrying step to the fore these criminal acts and practically swindle high amounts.Money laundering makes it possible to legitimate ill-gotten gains through computer abuses, insider trading, and bribery where these produce large amounts of profits. Money laundering takes nates within all types of profit-motivated criminal offence, such as embezzlement, fraud, misappropriation, corruption, robbery, statistical distribution of narcotic drugs, and trafficking in human beings (kokrim, 2008).2.2 Characteristics of Money LaunderingMoney Laundering consists of a series of various transactions used to change the outset of financial assets so as these assets can be used without compromising the criminals offences. These transactions involve 3 stages (Billy Steel)2.2.1 PlacementThe fir st stage refers to the physical distribution of financial assets. It is the to the highest degree dangerous one for the perpetuators as the money from illicit activities ar introduces into the financial system. Money laundering is a cash intensive line of credit generating huge amount of cash from unlawful activities (for example street drug dealing, where payment are made in cash). The proceeds are then place into financial institutions, in the retail economy or deposits out of the country. The principal aim of the launder is to deliberately remove the cash from the location of acquisition and to metamorphose it into other assets so as to prevent detection from authorities.2.2.2 LayeringLayering involves creating complex layers of financial transaction designed to cover audit tails and provide secrecy. The first attempt is to disguise the origin and ownership of the specie by creating complex layers of transaction. The idea of the transaction is to disassociate the illegal fu nds to the source of the offence. Layering is the second stage, in which the funds are moved so as to veil or remove whatever whatsoever link from the crime committed to obtain the money.During the layering process, a bit of accounts, financial institutions, companies, funds as well as the use of professionals such as brokers, lawyers and consultants as intermediaries could be involved as this is where the money will be channelled. Assets that are bought through unlawful funds can be resold locally or abroad and as a result, the assets become more difficult to affair out and seize.2.2.3 IntegrationThe final stage consists of the integration of the money in the legitimate economic and financial institution. Integration is the stage whereby takes place the creation of a legitimate basis for the asset origin. The launder make the money appear legally earned and cleaned. At this stage it is very difficult to distinguish by authorities the difference between legal and illegal wealth. The money is viewed as being legal, and the criminal can use it for any purpose. Illicit money is often removed from its country of origin to be cycled through the international payment system so as to blur any audit trait (Joyce, 2005). in that location are different ways in which the third stage of money laundering is done. For example, a credit card might be handed out by offshore banks, casino winning can be cashed out, capital gains on option, and stock trading might follow, and real estate change might lead to profit. The proceeds of criminal acts could be generated from organized crime such as drug trafficking, people smuggling, people trafficking, proceeds from robberies or money acquired by embezzlement, tax evasion, fraud, abuse of company structures, insider trading, or corruption.Popular Methods of the launders at this part of the game isSending fake import export invoices and overvaluing the price of the goods. whence in allows the launders to more the funds from one company or country to another with the invoices serving as source of the capital place with financial companies.A simpler technique is to shift the money (via EFT) to a rightful bank from a bank owned by the launderers, as off the shelf banks are tardily purchased in many tax havens.The establishment of unspecified company in countries where the right to concealment is guaranteed. In such case the launderer is in a stance to grant loans from banks to undertake certain future legal transaction. In addition launders can claim tax relief on loan repayments and interest on loan so as to increase their profits.Most criminal acts are motivated by profit, argues Financial Intelligence Unit (2008). When substantial profits are generated from crime, perpetrators have to devise a means to control the assets in such a way that they do not attract attention to themselves or the crime committed. Thus, the money laundering process is crucial in order to enjoy the profit without arousing suspici on.2.3 Problem statement2.3.1 Banking Secrecy A major drawback of money launderingBanking secrecy is a professional obligation, meaning that financial institutions shall not expose a customers financial information and they even have the right to resist any third partys enquiries in order to protect the customers wellbeing. Secrecy laws have served to safeguard persons from financial failure in countries plagued by unsteadiness, fragile currency and run-away inflation rate. blotto privates and political agents are also protected by allowing them to hide their possessions to avoid the bump of persecution (Savona, E.U, 1997).In some countries, for example in Switzerland, the revelation of secret banking information is punishable by law, whether it is intentional or unintentional (Corrado, M.G, 1988).In the world we are presently living, nobody can deny the fact that banking secrecy is the most significant weapon for money launderers. Some countries like Hong Kong, Switzerland, Pana ma are even known as notorious banking secrecy heavens. These jurisdictions really make the crime of money laundering more severe and out of control. For instance in Hong Kong, a new regulation was introduced in 2000 which requires banks to report distrustful transactions. This resulted in 6,100 suspicious transactions being reported in 2000 and 95% of them were from banks (www.hongkong.org/press/ny-021400.htm, 15th Aug 2001)2.4 Combating Money Laundering The Lifting of Banking SecrecyDespite being an important part of individual privacy, banking secrecy has to be lifted in some cases as it is equally important to fight against money laundering in order to guarantee a protected and safe society. The lifting of bank secrecy has already been embodied in the most vital international documents. Each party should authorize the court or other authority to order that financial or business reports should be made accessible or be seized under the 1988 Vienna UN Convention, the 1990 Strasbou rg Convention and the 2000 Palermo US Convention specifically.The FATF recommended that financial institutions should concentrate on all unusual or large transactions, which have no evident economic or lawful purpose. such transactions should be examined, written and be made available to supervisors, auditors and law enforcement agencies. If financial institutions doubt that proceeds come from a criminal activity, they are involve to account for their suspicions to the expert authorities without delay (The FATF Recommendations on Money Laundering, 1996 Art 14, 15).These measures are innovative, modern and extremely different from the conventional banking system. In early times, the relationship between financial institutions and customers were founded on trust and confidence neither the banker asked questions nor the customers made disclosures. The situation has now changed. Along with that, the way of thinking and attitude of bank directors, supply and that of management authori ties have changed (Galvao G, 1997).3.0 Research Methodology3.1 Aims and Objective of the researchThe aim of the research is to identify evidence of banking secrecy and their effectiveness in combating money laundering. Cases of money laundering in Mauritius will be studied and analysed. Key principles from the anti-money laundering act and from regulations imposed by bank regulators (e.g. Financial Services commission and the Bank of Mauritius) will be outlined. The study will then research on the measures taken by banks to fight against potential cases of money laundering in order to guarantee a protected and safe banking service. The lifting of bank secrecy has already been embodied in the most vital international documents. The objectives of this research are to3.2 Research MethodA survey with a self-administered questionnaire will be the data collection technique used. The questionnaires will be sent to the senior managers, executives and separate managers of the identified ba nks in Mauritius. Visits to the company/meeting with the relevant person will be carried out where necessary to ensure maximum response and that questionnaire is being alter up by the addressee.Also, secondary data will be taken from company websites, reports and financial statement to supplement research.3.3 Statistical Analysis of dataafter the questionnaire, the response will be input as data so as to make use of specific statistical technique. Thus SPSS statistical big money will be used to analyze data for the findings of the research.3.4 Benefits of the ResearchThe research will be beneficial toCompaniesGovernmentFuture Research Dissertations3.4.1 CompaniesCombating money laundering will have a positive impact on companiesThrough integrated management of financial crime operational efficiencies will improveThe risk of corruption, identity crime and other criminal crimes will decreased considerablyReduced financial risk, reputational risk and legal riskBad debts and fraud l osses due to customer comprehensiveness3.4.2 GovernmentMoney laundering has a negative effect on the economy, such as loss of control on the economical policy, economic distortion and instability. Moreover, government loss revenue as tax collection becomes more complicated and confusing. Therefore, the research will help to reduce these drawbacks.3.4.3 Further ResearchResearch will assist other researchers to make further research in the topic.Ghantt ChartTask/activityMarAprwhitethornJunJulAugSepOctChoose topicLiterature searchDeveloping frameworkDesign questionnaireSurveyData InputAnalysisWriting up raiseBudget AnalysisExpendituresRsConsultants and contracts1400Travel400Supplies and materials400Communications (Telephone, postage, etc.)150Equipment (Purchase)700Other (Equipment rental, etc.)400Total3450