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Why Shady Businesses Launder Money: Most Notorious Cases


9 min read

Does money laundering sound like a practice directly from a detective novel? Or maybe it’s a well-crafted fictional scheme laid out in, say, Ozark, a TV series by Netflix where a financial advisor helps launder money for his drug boss? No matter how obviously illegal and fraudful this may seem to occur in the present-day world, when large criminal enterprises get too much cash, they need to clean it. As the only answer to the question of how to clean money, laundering proves the best variant for drug smuggling organisations or other shady businesses.

In the age when everything is monitored, controlled, and can be quickly arranged in spreadsheets or infographics, money laundering continues to be a headache for tax authorities as well as governments. You may be surprised to learn that sometimes banks are complicit in suspicious financial scams, which significantly simplifies money laundering processes for criminals. If you still assume that these activities are already verging on extinction and there’s nothing to worry about, here are 3 astonishing facts:

  1. There were 13,878 money laundering convictions in China in 2019;
  2. The market’s size of anti-money laundering software is expected to grow from $690m in 2016 to almost $1.8bn in 2023;
  3. The number of suspicious financial operations carried out in Italy grew up to slightly more than 60k in 2020.

Yet, why should entrepreneurs care about money laundering if their activity is as clean as a whistle? To make things plain, dark businesses clean out their illegally obtained financial resources through multiple industries, including airlines, malls, restaurants, mining, tourism, banking, or almost any other commercial sector out there. Hence, you need to be careful and well-prepared before investing, partnering, negotiating, or using third-party services. Any enterprise, potential client, or provider can prove a blind bargain, so it’s always better to stay plugged into DashDevs to keep your ear to the ground!

Basics: What Is Money Laundering?

Technically, money laundering reflects a set of procedures employed by enterprises to convert massive amounts of money obtained from illegal operations, like sponsoring terrorism or drug trafficking, into legitimate sources of income. But wait, If this activity is unlawful, what are the penalties for money laundering? According to the US anti-money laundering laws and regulations, the most severe form of punishment is a fine up to $500k or twice the sum of how much a convicted person’s property costs, not to mention the imprisonment of up to 2 decades for every violation. In the UK, an individual involved in money laundering may carry a maximum penalty of 14 years of imprisonment on par with a limitless fine.

But what is the purpose of laundering money, let alone a reason to initiate such a complex, multilayered process that’s also so ruthlessly punished? The primary cause is that illegally obtained ‘dirty’ money can’t be used publicly without converting it into ‘clean’ assets. What about another portion of curious money laundering statistics? Did you know that the sum of money laundered each year amounts to about 2-5% of global GDP, which easily converts into $800bn-$2trln? Moreover, the odds are that this isn’t the final amount, and a great proportion of it is hidden beneath multiple layers of intricate machinations. Still wondering why a law-obedient product owner or entrepreneur needs to read about money laundering? Go on, and you’ll be surprised why you need an AML solution!

Intermediate: What Are the Stages of Money Laundering?

Since money laundering is a complicated and multifaceted procedure, it must be subjected to coherent systematisation, right? So, how does money laundering work? For you to quickly and effortlessly spot this type of illegal activity, below are laid out 3 crucial stages, after which cash is considered ‘clean’ and often can’t be distinguished from legal money:

  1. Placement. Let’s imagine a drug trafficking enterprise. Their alleged ‘CEO’ initiates the entire money laundering process by inserting ‘dirty’ cash into legal systems, such as a tattoo studio, casino, or car park. Other approaches encompass dummy invoices, trusts or offshore companies, smurfing, foreign bank accounts, and aborted transactions. By means of letting ‘unwashed’ cash circulate inside legitimate businesses, the imagined ‘CEO’ of a drug trafficking organisation launders their money.
  2. Layering. Usually, shady businesses enter this stage via offshore accounts and intricate webs of small transactions to ensure that the laundered money remains within legal financial systems. By obscuring the audit trail, breaking the funds into smaller parts, and referring to fraudulent bookkeeping, criminals distance themselves from law enforcement agencies. Also, this stage may involve trading in stocks or currencies, money orders, and banker’s drafts. Despite dozens of ‘security’ layers and myriads of schemes employed during this stage, layering remains the most vulnerable procedure. Since laundered money travels around overseas markets and multiple financial systems, it’s easier to make a mistake.
  3. Integration. Once the ‘dirty’ money isn’t distinguished from its ‘clean’ alternative, having amalgamated with the economy, the third stage begins. After placing and layering cash, it must be brought back into the legitimate financial system in the form of a ‘legal’ tender. That’s when criminals make up stories regarding the origin of their money. In addition, they can integrate the laundered money via paying wages to fake employees or dividends to shareholders who’re also launderers. Without official documentation proving the illegal source of wealth, there’s almost no way an authority can catch criminals during the integration stage.

Advanced: How Does Money Laundering Affect Business?

A reasonable question to ask at this point would be how does business money laundering influence the activity of law-obedient enterprises? Mainly, it disrupts the private sector’s legitimate part and facilitates the loss of control over financial systems. Aside from destabilising the economy, money laundering ruins the reputation of anyone who’s considered even slightly related to its underlying processes. For instance, it has once marred the reputation of ING, Lloyds Banking Group, HSBC, Barclays, and many other banking institutions, inasmuch as these have been fined for being engaged in illegal transactions. Therefore, even organisations, whose activity is legal at first glance, can face the side effects and implications of money laundering.

As a rule, the formula is as follows: the more fraudulent activities in a developed country, the stronger the anti-money laundering regulations (AML), which, in turn, entails fewer cases of money laundering. Nevertheless, not all countries and regions intensify AML laws. According to Statista, among all Latin American and Caribbean regions in 2021, Haiti had the highest risk index score of money laundering as well as terrorist funding, which was almost 8.5, followed by the Cayman Islands (7.6), Nicaragua (6.8), Bahamas (6.5), and Paraguay (6.4). Money laundering activities can’t but affect legal businesses because they stimulate more harsh regulations in the economy, undermine the market, and pose a threat to enterprises through funding terrorism.

5 Most Notorious Money Laundering Cases in History

Below you may find the most world-known examples of money laundering that will shed light on how allegedly legitimate organisations abuse their powers to indulge the whims of growing even richer.

Bank of Credit and Commerce International (BCCI)

One of the most renowned frauds in the 20th century began in 1972 when a Pakistani businessman Agha Hasan Abedi created the BCCI, defunct in 1991. Since its inception, it has been involved in fraudulent transactions and financial schemes. To eschew regulatory inspection, the BCCI referred to a broad spectrum of intricate models like secrecy havens, bribery, and shell firms. As a result, over its two-decade history, the bank managed to launder about $23bn.

Liberty Reserve

The founder of this digital currency service, Arthur Budovsky, had pleaded guilty to facilitating money laundering through his platform and was sentenced to 20 years behind bars. Operating from Costa Rica, the online facility conspired to commit cybercrime and violate the AML regulations. Among all money laundering charges discussed, this one seems unusual because it involves digital assets. Started as a secure payment provider in 2006, Liberty Reserve allowed customers to convert the in-built digital currency to either US dollars or Euros. After a series of legal proceedings, the entire undertaking was found to be a giant billion-dollar money-laundering enterprise.

Hongkong and Shanghai Banking Corporation (HSBC)

Like other banks in this list, HSBC was fined for insufficient management and adherence to the AML regulations. In particular, the bank facilitated the laundering of more than $881m obtained as a result of drug trafficking. That’s why HSBC was ordered to pay $1.9bn as a fine to US authorities. This case was associated with circumventing international sanctions, failing to comply with legislation, and neglecting many other legal practices. Finally, HSBC was also then allegedly related to clear the way for funding terrorism.


Commerzbank is known to have turned a blind eye to AML systems and controls between 2012 and 2017, which resulted in massive amounts of laundered money. That’s why the bank had to pay more than $37m during the early investigation stage. Like in previous cases, Commerzbank was accused of failing to operate under AML principles, thereby ignoring a high number of obviously fraudulent transactions.

Standard Chartered Bank

In 2019, this banking institution had to pay $1.1bn to reduce the legal pressure related to poor money laundering control as well as breaching sanctions. As the Guardian reports, $947m was to go to American agencies, the US Department of Justice included, while £102m — to the Financial Conduct Authority. It all started in 2012 when the British bank was accused of not acting in accordance with AML rules. That being the case, Standard Chartered Bank helped the Iranian institutions launder about $250bn over a 10-year period.

What Can You Learn from These Cases?

  • It takes time and effort to opt for business partners and parties to negotiate with;
  • It’s always better to run a clean, ethical commercial activity with medium ROI instead of diving into a risky business with suspiciously high returns;
  • You should carefully pick a bank where to deposit significant sums of money;
  • Measure thrice, check twice, and cut once before investing in an unknown business;
  • You’d better stay away from suspicious politics.

Tips on How to Prevent Money Laundering and Protect Your Business

Even when you see those involved in money laundering sentenced to imprisonment and ordered to pay huge fines, it’s all right to distance yourself from their cases. At the same time, there’s much you can do to mitigate or even prevent this from happening. As a digital business owner, you’ve got several options to protect your enterprise from money launderers:

  1. Level up your personnel. As long as your employees mind the protocol and AML regulations, you’ll fan away money launderers who may see your business as a target. By training your workers, minimise the odds of missing a hint at a fraudulent activity. Hiring a financial advisor can also prove a weighty idea.
  2. Make use of AI and other high-end IT. By investing in machine learning and availing yourself of artificial intelligence, you’ll be able to quickly detect fraudulent actions, monitor the activity of potential criminals, and identify false positives.
  3. Scale your network and standardise platforms. This will undoubtedly keep you in the clear and scare launderers stiff since the system where you carry out all operations is controllable, monitored, managed, and protected.
  4. Seamless cross-platform interaction. There’s nothing to be afraid of if you keep regular contact with various government agencies, such as tax authorities, law enforcement, etc. It’ll help spot criminals right away and ensure transparency.
  5. Keep documentation clean and publish financial reports. Whether it’s the process or product documentation, you should try to manage it properly so that no agency will ever suspect anything illegal. If there’s a suspicious client who uses your network for fraud, you’ll be able to find them immediately.

Why Should Businesses Care about Anti-Money Laundering?

A stable medium-sized business is better than a rocketing startup built over suspicious transactions and machination schemes, right? Money laundering isn’t a relic of the past. It’s real and still affects communities, governments, and businesses. But you can be the one to contribute to anti-money laundering activities by merely following the above rules.

In case you procrastinate and feel uncertain about abiding by the AML principles, remember that contacting DashDevs is always a good idea. Don’t dilly-dally for too long because rogues rarely sleep, while we have solutions!

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