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Main article: Money laundering

Organized crime groups generate large amounts of money through engaging in activities including extortion, theft, drug trafficking, arms smuggling and financial crime. (70) These illegally sourced assets are of little use to them unless they can disguise it and convert it into funds that are available for investment into legitimate enterprise. The methods they use for converting its ‘dirty’ money into ‘clean’ assets encourages corruption. Organized crime groups need to hide the money’s illegal origin. This allows for the expansion of OC groups, as the ‘laundry’ or ‘wash cycle’ operates to cover the money trail and convert proceeds of crime into usable assets. Money laundering is bad for international and domestic trade, banking reputations and for effective governments and rule of law. '''This is due to the methods used to hide the proceeds of crime. These methods include, but are not limited to: buying easily transported values, transfer pricing, and using “underground banks.” Launderers will also co-mingle illegal money with revenue made from businesses in order to further mask their illicit funds Accurate figures for the amounts of criminal proceeds laundered are almost impossible to calculate, rough estimates have been made, but only give a sense of the scale of the problem and not quite how great the problem truly is. The United Nations Office on Drugs and Crime conducted a study, they estimated that in 2009, money laundering equated to about 2.7% of global GDP being laundered; this is equal to about 1.6 trillion US dollars.  And the Financial Action Task Force on Money Laundering (FATF), an intergovernmental body set up to combat money laundering, has stated that "A sustained effort between 1996 and 2000 by the Financial Action Task Force (FATF) to produce such estimates failed"'''. However, anti-money laundering efforts that seize money laundered assets in 2001 amounted to $386 million. The rapid growth of money laundering is due to:

·      the scale of organized crime precluding it from being a cash business - groups have little option but to convert its proceeds into legitimate funds and do so by investment, by developing legitimate businesses and purchasing property;

·      globalization of communications and commerce - technology has made rapid transfer of funds across international borders much easier, with groups continuously changing techniques to avoid investigation; and,

·      a lack of effective financial regulation in parts of the global economy.

Money laundering is a three-stage process:

·      Placement: (also called immersion) groups ‘smurf’ small amounts at a time to avoid suspicion; physical disposal of money by moving crime funds into the legitimate financial system; may involve bank complicity, mixing licit and illicit funds, cash purchases and smuggling currency to safe havens.

·      Layering: disguises the trail to foil pursuit. Also called ‘heavy soaping’. It involves creating false paper trails, converting cash into assets by cash purchases.

·      Integration: (also called ‘spin dry): Making it into clean taxable income by real-estate transactions, sham loans, foreign bank complicity and false import and export transactions.

Means of money laundering:

·       Money transmitters, black money markets purchasing goods, gambling, increasing the complexity of the money trail.

·      Underground banking (flying money), involves clandestine ‘bankers’ around the world.

·      It often involves otherwise legitimate banks and professionals.

The policy aim in this area is to make the financial markets transparent, and minimize the circulation of criminal money and its cost upon legitimate markets.