What is Money Laundering:
Money Laundering is the illegal process of making large amounts of money generated by a criminal activity, such as drug trafficking or terrorist funding, appear to have come from a legitimate source. Criminals use this technique to clean their dirty money. By passing money through complex transfers & transactions, or through a series of Businesses, the money is cleaned of its illegitimate origin and made to appear as legitimate Business Profits.
Phases of Money Laundering:
The first stage is when a person engaged in criminal activity injects cash proceeds into the financial system. It is the initial movement of criminal money into Legal network. At the end of this stage the original source of the money may be concealed.
Layering is done to make it difficult to trace the illegal money. After placing the dirty money in the financial system, it will be either converted into monetary instruments or Assets will be purchased using the funds and later it will be sold in order to make tracing impossible.
The final stage is to take the money back without taking it to the knowledge of government. For example: Paying Salary to Dummy Employees & collecting it back, Sanctioning Loans to directors which will never be repaid etc.
Money Laundering through Shell Companies is a popularly used technique. A Shell Company does not exist in the real world. They exist only in Fake Documents. No Production /Distribution will take place in such companies. Large amount of dummy transactions will be passed using Shell Companies. The Money Launderer will get Loan in the name of these Companies. False documents will be maintained to confuse the regulatory & Tax authorities in order to confuse them.
Money Laundering in Dubai:
Dubai is one of the Leading business centers in the Middle East, which does business with companies & Individuals across the World. Globally developed Business Sector in Dubai possesses high threat to Money laundering Activities. DFSA (Dubai Financial Services Authority) is Dubai’s International Standards Financial regulators. DFSA aims at promoting & maintaining transparency & efficiency of financial services, increasing confidence in the financial service industry & to regulate the financial institutions.
Auditor’s Role against Money Laundering:
In Dubai, many Institutions face Regulatory & Reputational risks for non-compliance with Anti-Money Laundering Regulations. KGRN chartered accountant firms in Dubai will help to prevent variety of Money laundering and sanctions related risks. We assist you in complying with the Regulations & to build a Strong Control framework.
Under the new Anti-Money Laundering Law in Dubai, Corporate Liability for Money Laundering offences has been extended to fines of up to AED 50,000,000 and Compulsory Liquidation where the offence is related to terrorist financing. Hence in order to avoid all these Legal Consequences, it is always suggested to take Expert Assistance.