The Ugly Truth behind Money Laundering

& the Importance of Better AML Systems.

Anti-money laundering efforts are an essential and vital part of maintaining trust in our financial system. Financial Institutions spend between 2-5% of their revenues on AML efforts. This number is only going to increase, and despite flooding money into the problem, banks have been fined millions of dollars for money laundering scandals. Moreover, only 1% of laundered money is caught, from a total of approximately 800 billion to 2 trillion USD[3]. These facts illustrate why AML is a monetary issue, but there are more critical sides to money laundering that impact us all.

The worst guys get away with it

Money laundering is by no means a victimless crime. Newspaper headlines create the impression that money laundering simply happens through elaborate accountant exercises. Or that money laundering is primarily a tool for tax evasion. However, laundering has evolved to fuel the thriving illegal markets of organized crime, terrorism, drugs, corruption, and human trafficking. Proceeds from these atrocious dealings can only be spent, without raising questions, once the money has been laundered and thus appears as clean and legitimate. Each laundered dollar is a dollar that comes from crime, negatively impacting our lives.

Today, the most notorious criminals tend to get away with their crimes when money laundering is detected. Pawns within the organized crime hierarchy or even victims of the networks are more likely to be prosecuted. Victims of human trafficking are, for example, frequently the ones identified for money laundering, despite being the sufferers of a horrendous crime. Using a stylized case, a masseuse who is forced into sex trafficking has to take cash on the side. The money is then laundered through the massage parlor, which leads to the masseuse being prosecuted for a crime she is the victim of.

Time for a change

The situation above arises due to the ineffectiveness of current AML systems. The systems are limited; they only have capabilities to discover isolated cases of money laundering and are unable to see the bigger picture.

At Lucinity, we can detect complex networks of how organized crime launders money.

By utilizing cutting edge AI and enhancing it with human intuition, we not only identify the victims but, more importantly, the people who are responsible and profit from the crimes.

Happier customers and a better world

Financial institutions that use Lucinity realize that AML is crucial to customer trust. Customers do not want to be associated with banks that aid criminals in creating some of our worst societal problems. By partnering with Lucinity, companies are able to expose real money-laundering and the networks used to conduct it.

We want to see a world where the issues facilitated by money-laundering are a thing of the past. Financial institutions have an opportunity to take a significant stance in the fight against organized crime, and we are eager to help them.

Sources:

– Boston Consulting Group (2017) ‘Transforming Bank Compliance with Smart Technologies’
– United Nations Office on Drugs and Crime (2020) ‘Money-Laundering and Globalization’
– Financial Action Task Force (2019) ‘Money Laundering’
– Reuters, Fruth, Op. cit. 1
– Polaris Project (2018) ‘Money Laundering in Massage Parlors’

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