Money laundering is a phenomenon that has resulted from the sophistication of criminal activities.
It is the criminal act of changing the identity of illegally-obtained money so that it appears to have originated from a legitimate (or “clean”) source.
The term money laundering is typically used for any financial transaction which generates money or an asset as the direct result of an illegal act, such as tax evasion or false accounting.
Given that an arrangement for car finance results in the customer receiving a vehicle rather than funds from the lender, the initial transaction is less susceptible to money laundering. The main risk arises if the customer seeks to accelerate the agreed repayment schedule, by means of lump sum (cash) payments and/or early termination. Early repayment can also be indicative of funds being used which have emanated from a criminal lifestyle.
Money laundering is generally carried out by organised criminal gangs, but it can be just as easily committed by opportunistic individuals or small and large businesses.
Although money laundering is often associated by the public with drug trafficking or organised crime, it may also be the result of other criminal conduct including:
- terrorist activity
- theft and fraud
- forgery and counterfeiting
- blackmail and extortion
- tax evasion