When people talk about money laundering in everyday life, they often think of the dubious kiosk on the corner where nobody shops but there are always expensive cars parked in front of it.
However, the large sums of money laundered in Switzerland do not flow through dubious kiosks and barbershops but, who would have thought it, through our banks.
It is estimated worldwide that more than 3,600 billion dollars per year flow through money laundering and corruption.
But what is money laundering actually? In this article, you'll find out everything you need to know about money laundering and its impact on your life!
Money laundering is the process by which illegally acquired money is channelled into the legal financial cycle. The aim is to disguise the origin of the money and launder the dirty money "clean".
Incidentally, the term money laundering was coined by the Italian-American gangster "Al Capone", who used launderettes to launder money.
Placement is the first step in which illegal money is introduced into the legal financial cycle. This often happens through deposits in banks in instalments or the purchase of luxury goods.
More complex methods are usually used for larger sums. Letterbox companies and front companies in tax havens are often used for this purpose. More on this in a moment.
In the second step, the money is "laundered" through various transactionsto make pursuit more difficult.
Falsified sales contracts, invoices, transport documents and other documents are created to conceal the illegal sums in a flood of documents.
In the final step, the Money integrated into the legal financial cycleoften through investments in property, companies or other legal business areas.
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Switzerland has Strict laws and regulations to combat money laundering. In everyday life, you will notice this every time you want to open an account, for example. Then you have to clearly identify yourself, show your ID and also explain whether your money comes from investments or a job, for example.
Banks and other financial institutions are obliged to do so, report suspicious transactions. Unfortunately, this doesn't always work, as the fraudsters are naturally creative and are constantly coming up with new tricks.
Quite often, however, the fraudsters seem to become lazy and negligent. Then they simply submit documents to the bank, which any banker should notice. Here is one real example, from a case involving the Lithuanian bank Ukiowhich transferred billions from dubious Russian sources.
Imagine you worked for a Swiss bank and received money from a bank under suspicion. Would you ignore the following facts?
- The source of the payment is a highly conspicuous dubious letterbox company.
- The letterbox company is in a Tax haven in Central America resident.
- The invoices submitted show a wrong sum on.
- Customer and buyer are suddenly mixed up.
- ...
Unfortunately, the banker responsible had not noticed this genuine case.
The flood of money sometimes seems to overwhelm our banks, so that even supposedly simple tricks do not attract attention. The Tagesanzeiger has presented this very clearly and interactively. You can test here whether you have noticed these money laundering tricks would be.
In the Money laundering is an issue in Switzerland, particularly in the context of the international banking sector. Swiss banks are therefore particularly required to recognise and report money laundering.
Banks, investment firms and insurance companies are audited by the FINMA.
Although banking secrecy has been lifted and international anti-money laundering agreements have been signed, the Swiss banks repeatedly criticisedto transfer dirty money. This has also recently become highly publicised again with regard to money from Russian oligarchs.
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The effects of money laundering extend far beyond the financial system. By channelling illegal funds into the legal economic cycle, the Undermining the basic principles of the economic order. Confidence in the financial system is also suffering massively.
In addition, money laundering often criminal activities such as drug trafficking, human trafficking and terrorism, which in turn affects the security and well-being of society. Furthermore, money laundering Corruption and infiltration of state institutionswhich can weaken the political system and the rule of law. An example of this on a gigantic scale are the Panama Papers.
Money laundering should illegal Bringing money into the cycle of legal money.
Tax evasion should legal Bring money to the tax office and avoid taxation.
Each and every one of us can feel the effects of money laundering, often without realising it directly.
The inflation of criminal money can increase the prices of goods and services, which affects us all. The 3,600 billion dollars per year mentioned at the beginning, which flows illegally, has an enormous impact. By way of comparison, this is about 4-5x more than the Swiss gross domestic product!
Incidentally, you can report suspected money laundering to the Money Laundering Reporting Office.
What do you think about money laundering? Have you ever noticed anything suspicious? Share your experiences and thoughts in the comments section!
Around the corner is a pizza kebab joint, 6 employees, 6 cars, a rent of 11 thousand a month and bakes an average of 10 pizzas a day.
Nobody notices.....
You are confusing the two levels of money laundering.
In illegal businesses, payment is usually made in cash, or do you know a dealer who takes credit cards? In order to convert this cash back into book money, you need legal businesses where cash payment is common and whose turnover cannot be estimated without further ado. These are barber shops and kiosks, but also restaurants. They declare it as income, pay tax on it and the money is legal.
But what you mean is how to pool these small amounts of book money in order to invest them legally...
Hello Alain,
Thank you for your expert knowledge on the subject 😀
It is probably best to distinguish whether there is a cash flow at all or not. The distinction in the article comes from the official authorities, I didn't make it up.
Hi Eric
I'd just like to use your latest blog post to thank you for your great work. I've read various blog posts from you this week and find a lot of it very valuable and enriching (I already know a lot of it quite well and so I was already familiar with a lot of it; still very good content, especially for starters).
The fact that we both come from southern Germany, studied something technical there, are probably of a similar age and have both discovered our love for Switzerland and live here makes you and your blog even more likeable.
I look forward to more great topics and ideas from you and wish you continued success.
Thank you very much for your positive feedback, Tom! 🙂 That makes me very happy.
By the way, ideas and input for new topics and posts are always welcome, the blog is ultimately there for you! 🙂
Best regards
Eric