Money laundering is defined as;
“Make to proceeds of the crime appear respectable.”
The whole world is now taking serious actions against money laundering. In United Kingdom, the parliament has passed money laundering act. This act has been influenced on different parliament acts. These are:
-Drugs Trafficking offenses Act 1986. -Criminal Justice Act 1993. -Terrorism Act 2000. -Anti Terrorism Crime Security Act 2001. -Proceeds of Crime Act 2002.
Money laundering is based on different crimes. It is just the end form of different crimes. Some criminal offenses are mentioned below which are included in Proceeds of crime Act:
Laundering: Acquisition, possession or use of the proceeds of crime.
Failure to report: If somebody fails to disclose knowledge or suspicion of money laundering then he will be liable for crime.
Tipping off: Somebody who disclose information to any person who is involved in some crime then he is also liable and contributor in crime.
For example a bank manager who sees any illegal transaction then he should declare this information to related body reporting officer, before the transaction took place or right after the transaction. Otherwise he will be investigated and failure to disclose will lead him to crime.
There are three major phases in money laundering. These are mentioned below:
Placement: Change the initial disposal of the illegal activity into legal business activity.
Layering: It means to put different layers to hide the original proceedings.
Integration: After placement and putting different layers, the money has the appearance of legal funds.
Accountants can play a vital role in reducing the chances of money laundering. They have to be very careful while preparing accounts of company because accountants are liable to disclose any illegal activity inside the company. Now accountants have to be followed many regulations which are set by international body of accountants. It is mentioned in these regulations that accountants will be asked of any suspected transaction.
If somebody has been involved in the above offenses then he may have to face serious penalties. The British Law sets the following penalties regarding illegal transactions:
1. Person who is directly related with illegal transaction can be penalized 14 years imprisonment and/or fine. 2. A person who is responsible for failure to report information may be given 5 years imprisonment. 3. 5 years imprisonment is given for tipping off a suspected launderer; but suspected launderer must not be alerted.