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105-398: Money laundering is the process of illegally concealing the origin of money obtained from illicit activities (often known as dirty money ) such as drug trafficking , underground sex work , terrorism , corruption , embezzlement , and Treason , and converting the funds into a seemingly legitimate source, usually through a front organization . In United States law, money laundering is

210-412: A banking institution , is a business entity that provides service as an intermediary for different types of financial monetary transactions. Broadly speaking, there are three major types of financial institution: Financial institutions can be distinguished broadly into two categories according to ownership structure: Some experts see a trend toward homogenisation of financial institutions, meaning

315-419: A $ 3.30 per hour wage for foot soldiers. Contrary to a popular image of drug sales as a lucrative profession, many of the employees were living with their mothers by necessity. Despite this, the gang had four times as many unpaid members who dreamed of becoming foot soldiers. There are several arguments on whether or not free trade has a correlation to an increased activity in the illicit drug trade. Currently,

420-583: A heavily regulated environment because they are critical parts of countries' economies, due to economies' dependence on them to grow the money supply via fractional-reserve banking . Regulatory structures differ in each country, but typically involve prudential regulation as well as consumer protection and market stability. Some countries have one consolidated agency that regulates all financial institutions while others have separate agencies for different types of institutions such as banks, insurance companies and brokers. Countries that have separate agencies include

525-832: A path to the United States and Europe for illegal drugs originating in Colombia , through Central America, Mexico and Caribbean countries such as Haiti , the Dominican Republic , and Puerto Rico . According to the United Nations, cocaine trafficking through Venezuela increased from 2002 to 2008. In 2005, the government of Hugo Chávez severed ties with the United States Drug Enforcement Administration (DEA), accusing its representatives of spying. Following

630-449: A power play in order to gain influence, and as a result created more corruption in the government. One such power play was an alliance with drug traffickers. This political corruption obscured justice, making it difficult to identify violence when it related to drugs. By the 1940s, the tie between the drug cartels and the PRI had solidified. This arrangement created immunity for the leaders of

735-637: A primary trading route, due to its large-scale and costly war against drug trafficking. The Border Police Chief of Iran said that his country "is a strong barrier against the trafficking of illegal drugs to Caucasus, especially the Republic of Azerbaijan." The drugs produced by the Golden Triangle of Myanmar, Laos, and Thailand, on the other hand, pass through the southern routes to feed the Australian, US, and Asian markets. Venezuela has been

840-676: A profit in the cocaine smuggling market in order to leverage it for their activities. Drugs are increasingly traded online on the dark web on darknet markets . Internet-based drug trafficking is the global distribution of narcotics, making extensive use of technology. Similarly, the use of the Internet for the illegal trafficking of two controlled categories of drugs can also be identified as Internet-related drug trafficking. The platform Silk Road provided goods and services to 100,000 buyers before being shut down in October 2013. This prompted

945-410: A prominent political, economic, and legal debate. Money laundering is ipso facto illegal; the acts generating the money almost always are themselves criminal in some way (for if not, the money would not need to be laundered). While existing laws were used to fight money laundering during the period of Prohibition in the United States during the 1930s, dedicated Anti-Money Laundering legislation

1050-521: A prominent set culture of Mexican society that created the means for drug capital. One of the sites of origin for drug trafficking within Mexico, was the state of Michoacán . In the past, Michoacán was mainly an agricultural society. This provided an initial growth of trade. Industrialization of rural areas of Mexico facilitated a greater distribution of drugs, expanding the drug market into different provinces. Once towns became industrialized, cartels such as

1155-703: A report written for the United Nations Office on Drugs and Crime . A common approach was to use a digital currency exchanger service which converted dollars into a digital currency called Liberty Reserve , and could be sent and received anonymously. The receiver could convert the Liberty Reserve currency back into cash for a small fee. In May 2013, the US authorities shut down Liberty Reserve, charging its founder and various others with money laundering. Another increasingly common way of laundering money

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1260-516: A response, Mexico saw an increase in violence caused by drug trafficking. The corruption cartels created resulted in distrust of government by the Mexican public. This distrust became more prominent after the collapse of the PRI party. In response, the presidents of Mexico , in the late twentieth century and early twenty-first century, implemented several different programs relating to law enforcement and regulation. In 1993, President Salinas created

1365-440: A result of government requirements and to avoid the reputational risk involved. Issues relating to money laundering have existed as long as there have been large-scale criminal enterprises . Modern anti-money laundering laws have developed along with the modern War on Drugs . In more recent times anti-money laundering legislation is seen as an adjunct to the financial crime of terrorist financing in that both crimes usually involve

1470-508: A six-year period. This was spent as follows: $ 5,000 to the board of twenty directors of the Black Gangster Disciple Nation , who oversaw 100 such gangs for approximately $ 500,000 in monthly income. Another $ 5,000 monthly was paid for cocaine, and $ 4,000 for other non-wage expenses. J.T. took $ 8,500 monthly for his own salary. The remaining $ 9,500 monthly went to pay the employees a $ 7 per hour wage for officers and

1575-533: A tendency to invest in similar areas and have similar business strategies. A consequence of this might be fewer banks serving specific target groups, and small-scale producers may be under-served. This is why a target of the United Nations Sustainable Development Goal 10 is to improve the regulation and monitoring of global financial institutions and strengthen such regulations. Standard Settlement Instructions (SSIs) are

1680-647: Is a lack of local stability, as mayors cannot be re-elected. This requires electing a new mayor each term. Drug gangs have manipulated this, using vacuums in local leadership to their own advantage. In 1929, the Institutional Revolutionary Party (PRI) was formed to resolve the chaos resulting from the Mexican Revolution . Over time, this party gained political influence and had a major impact on Mexico's social and economic policies. The party created ties with various groups as

1785-412: Is a massive and growing problem. Finextra estimated that transaction laundering accounted for over $ 200 billion in the US in 2017 alone, with over $ 6 billion of these sales involving illicit goods or services, sold by nearly 335,000 unregistered merchants. Money laundering can erode democracy . Below table shows the annual reported money laundering cases per 100,000 population for individual countries for

1890-585: Is built using illegal funds, and when the house is sold, legal money is earned. When drugs are sent over land, through the Sahara, the drug traders have been forced to cooperate with terrorist organizations, such as Al-Qaeda in Islamic Maghreb . Drugs in Asia traditionally traveled the southern routes – the main caravan axes of Southeast Asia and Southern China – and include

1995-545: Is completely deterministic, protocol-based and can be difficult to censor—make it possible to circumvent national laws using services like Tor to obfuscate transaction origins. Bitcoin relies completely on cryptography, not on a central entity running under a KYC framework. There are several cases in which criminals have cashed out a significant amount of Bitcoin after ransomware attacks, drug dealings, cyber fraud and gunrunning. However, many digital currency exchanges are now operating KYC programs under threat of regulation from

2100-664: Is controversial. Solutions such as ZCash and Monero ― known as privacy coins ― are examples of cryptocurrencies that provide unlinkable anonymity via proofs and/or obfuscation of information ( ring signatures ). While not suitable for large-scale crimes, privacy coins like Monero are suitable for laundering money made through small-scale crimes. Apart from traditional cryptocurrencies, Non-Fungible Tokens (NFTs) are also commonly used in connection with money laundering activities. NFTs are often used to perform Wash Trading by creating several different wallets for one individual, generating several fictitious sales and consequently selling

2205-505: Is especially true in all developing countries, such as Honduras , but is also an issue for many developed countries worldwide. In the late 1990s in the United States the Federal Bureau of Investigation estimated that 5% of murders were drug-related. In Colombia, drug violence can be caused by factors such as the economy, poor governments, and no authority within law enforcement. After a crackdown by US and Mexican authorities in

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2310-577: Is integrated into the financial system through additional transactions until the "dirty money" appears "clean". Money laundering can take several forms, although most methodologies can be categorized into one of a few types. These include "bank methods, smurfing [also known as structuring], currency exchanges, and double-invoicing". In theory, electronic money should provide as easy a method of transferring value without revealing identity as untracked banknotes, especially wire transfers involving anonymity-protecting numbered bank accounts. In practice, however,

2415-854: Is not included in official financial reporting and could be used to evade taxes, hand in bribes and pay "under-the-table" salaries. For example, in an affidavit filed on 24 March 2014 in United States District Court, Northern California , San Francisco Division, FBI special agent Emmanuel V. Pascua alleged that several people associated with the Chee Kung Tong organization, and California State Senator Leland Yee , engaged in reverse money laundering activities. The problem of such fraudulent encashment practices ( obnalichka in Russian) has become acute in Russia and other countries of

2520-592: Is often laundered in countries such as Nigeria, Ghana, and Senegal . According to the Africa Economic Institute, the value of illicit drug smuggling in Guinea-Bissau is almost twice the value of the country's GDP . Police officers are often bribed. A police officer's normal monthly wage of $ 93 is less than 2% of the value of 1 kilogram (2.2 lb) of cocaine (€7000 or $ 8750). The money can also be laundered using real estate. A house

2625-659: Is supposed to address the problem, not apportion blame. Though street-level drug sales are widely viewed as lucrative, a study by Sudhir Venkatesh suggested that many low-level employees receive low wages. In a study he made in the 1990s working closely with members of the Black Gangster Disciple Nation in Chicago , he found that one gang (essentially a franchise ) consisted of a leader (a college graduate named J.T.), three senior officers, and 25 to 75 street level salesmen ('foot soldiers') depending on season. Selling crack cocaine , they took in approximately $ 32,000 per month over

2730-458: Is to use online gaming. In a growing number of online games, such as Second Life and World of Warcraft , it is possible to convert money into virtual goods, services, or virtual cash that can later be converted back into money. To avoid the usage of decentralized digital money such as Bitcoin for the profit of crime and corruption, Australia is planning to strengthen the nation's anti-money laundering laws. The characteristics of Bitcoin—it

2835-440: Is up to the individual to prove that the source of funds is legitimate to get the money back. This makes it much easier for law enforcement agencies and provides for much lower burdens of proof . However, this process has been abused by some law enforcement agencies to take and keep money without strong evidence of related criminal activity, to be used to supplement their own budgets. The 11 September attacks in 2001, which led to

2940-527: Is widely regarded by lawmakers as a serious offense around the world. Penalties often depend on the type of drug (and its classification in the country into which it is being trafficked), the quantity trafficked, where the drugs are sold and how they are distributed. If the drugs are sold to underage people, then the penalties for trafficking may be harsher than in other circumstances. Drug smuggling carries severe penalties in many countries. Sentencing may include lengthy periods of incarceration, flogging and even

3045-471: The 4th Armoured Division expanded captagon production and trafficking from Syria into a "business model controlled by the regime". In 2022, 90% of all captagon pills manufactured in Syria exported by drug cartels affiliated with Assad regime arrived at its customer destinations across the world. Although hundreds of millions of pills were intercepted and seized by police forces, these accounted only for 10% of

3150-700: The Assad regime and Hezbollah . A joint investigation conducted by Organized Crime and Corruption Reporting Project and BBC News Arabic published a documentary in June 2023, revealing further details about the activities of regime officials, Ba'athist military commanders and Assad family members in their involvement in Syria's drug cartel. The investigation found that Lebanese criminal and drug kingpin Hassan Daqou collaborated with Syria's Fourth Armoured Division on trafficiking billions of dollars of drugs, under

3255-630: The Fourth Armoured Division , directly supervises the production, smuggling and profiteering of the drug business. Already suffering from severe financial problems as a result of corruption and civil war, profits from Captagon are said to be the "lifeline" of the Assad regime, through which it earns more than 90% of its total revenue. The smugglers receive direct training from Syrian military to successfully conduct trafficking operations. Republican Guard , commanded by Maher al-Assad

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3360-535: The Merida Initiative , to help combat drug trafficking in Mexico. This program increased US security assistance to $ 1.4 billion over several years, which helped supply Mexican forces with "high-end equipment from helicopters to surveillance technology". Despite US aid, Mexican "narcogangs" continue to outnumber and outgun the Mexican Army , allowing for continued activities of drug cartels across

3465-715: The Narcosobrinos incident , Venezuelan President Nicolás Maduro 's two nephews were found guilty of trying to ship drugs into the United States so they could "obtain a large amount of cash to help their family stay in power". According to a research conducted by the Israel-based Abba Eban Institute as part of an initiative called Janus Initiative, the main routes that Hezbollah uses for smuggling drugs are from Colombia, Venezuela and Brazil into West Africa and then transported through northern Africa into Europe. This route serves Hezbollah in making

3570-666: The National Defence Forces and Hezbollah also consume illegal drugs in large quantities. In July 2023, German police busted a major captagon network run by two Syrian-born men in southern German state of Bavaria . Assad regime sponsors the largest Captagon production network in Syria; which is the source of about 80% of total captagon supply in the world. In an investigative report published by The Insider news-outlet in 2024, journalist Yuriy Matsarsky stated: "...Captagon produced in underground labs—and in actual Syrian pharmaceutical facilities—is distributed to

3675-599: The Office of Foreign Assets Control to sanction it, prompting some users to sue the Treasury Department. Proponents have argued mixers allow users to protect their privacy and that the government lacks the authority to restrict access to decentralized software. In the United States, FinCEN requires mixers to register as money service businesses. In 2013, Jean-Loup Richet , a research fellow at ESSEC ISIS, surveyed new techniques that cybercriminals were using in

3780-573: The Patriot Act in the U.S. and similar legislation worldwide, led to a new emphasis on money laundering laws to combat terrorism financing . The Group of Seven (G7) nations used the Financial Action Task Force on Money Laundering to put pressure on governments around the world to increase surveillance and monitoring of financial transactions and share this information between countries. Starting in 2002, governments around

3885-584: The Sinaloa Cartel started to form and expand. The proliferation of drug cartel culture largely stemmed from the ranchero culture seen in Michoacán. Ranchero culture values the individual as opposed to the society as a whole. This culture fostered the drug culture of valuing the family that is formed within the cartel. This ideal allowed for greater organization within the cartels. Financial institution A financial institution , sometimes called

3990-531: The US–Mexico border . Although narcotics are illegal in the US, they have become integrated into the nation's culture and are seen as a recreational activity by sections of the population. Illicit drugs are considered to be a commodity with strong demand, as they are typically sold at a high value. This high price is caused by a combination of factors that include the potential legal ramifications that exist for suppliers of illicit drugs and their high demand. Despite

4095-665: The United Kingdom and Qing-dynasty China. The British defeated the Chinese, and in the resulting treaty that ended the war, the Treaty of Nanking , the Qing government was forced to allow British merchants to sell Indian-grown opium. Trading in opium was lucrative, and smoking it had become common for the Chinese in the 19th century, so British merchants increased trade with the Chinese. The Second Opium War broke out in 1856, with

4200-880: The United States , where the key governing bodies are the Federal Financial Institutions Examination Council (FFIEC), Office of the Comptroller of the Currency – National Banks, Federal Deposit Insurance Corporation (FDIC) State "non-member" banks, National Credit Union Administration (NCUA) – Credit Unions, Federal Reserve (Fed) – "member" banks, Office of Thrift Supervision – National Savings & Loan Association, State governments each often regulate and charter financial institutions. Countries that have one consolidated financial regulator include: Norway with

4305-545: The United States Treasury Department : Money laundering is the process of making illegally-gained proceeds (i.e., "dirty money") appear legal (i.e., "clean"). Typically, it involves three steps: placement, layering, and integration. First, the illegitimate funds are furtively introduced into the legitimate financial system. Then, the money is moved around to create confusion, sometimes by wiring or transferring through numerous accounts. Finally, it

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4410-740: The death penalty (in Singapore, Malaysia, Indonesia and elsewhere). In December 2005, Van Tuong Nguyen , a 25-year-old Australian drug smuggler, was hanged in Singapore after being convicted in March 2004. In 2010, two people were sentenced to death in Malaysia for trafficking 1 kilogram (2.2 lb) of cannabis into the country. Execution is mostly used as a deterrent, and many have called upon much more effective measures to be taken by countries to tackle drug trafficking; for example, targeting specific criminal organisations that are often also active in

4515-607: The 18th century, British merchants from the East India Company began to illegally sell opium to Chinese merchants, and by the early 19th century, an illegal drug trade in China emerged. As a result, by 1838 the number of Chinese opium-addicts had grown to between four and twelve million. The Chinese government responded by enforcing a ban on the import of opium; this led to the First Opium War (1839–1842) between

4620-532: The 1970s. As of 2022, the Syrian government finances the biggest multi-billion dollar drug trade in the world, mostly focused on an illegal drug known as Captagon , making it the world's largest narco-state . Its revenues from Captagon smuggling alone is estimated to worth 57 billion dollars annually in 2022, which is approximately thrice the total trade of all Mexican cartels. General Maher al-Assad , younger brother of Syrian dictator Bashar al-Assad and commander of

4725-520: The 1980s and 90s, drug-related homicide was at a record high. This increase in drug violence became increasingly tied to these ethnic minorities. Though the rate of violence varied tremendously among cities in America, it was a common anxiety in communities across urban America. An example of this could be seen in Miami, a city with a host of ethnic enclaves. Between 1985 and 1995, the homicide rate in Miami

4830-478: The 1980s, the war on drugs led governments again to turn to money laundering rules in an attempt to track and seize the proceeds of drug crimes in order to catch the organizers and individuals running drug empires. It also had the benefit, from a law enforcement point of view, of turning rules of evidence "upside down". Law enforcers normally have to prove an individual is guilty to seize their property, but with money laundering laws , money can be confiscated and it

4935-507: The Andean countries, including Peru, Bolivia, Chile, Ecuador, Colombia and Venezuela. The underground market in the early half of the 20th century mainly had ties to Europe. After World War II, the Andean countries saw an expansion of trade, specifically with cocaine. The Ba'athist government of Syria ruled by the Al-Assad family is known for its extensive involvement in drug trade since

5040-578: The British joined this time by the French . The Treaty of Tianjin , which concluded that conflict, stipulated that the Chinese authorities would open further ports to foreign trade, including opium. In 1868, as a result of the increased use of opium in Britain, the British government restricted the sale of opium by implementing the 1868 Pharmacy Act . In the United States, control of opium remained under

5145-619: The National Institute for the Combat of Drugs in Mexico. From 1995 to 1998, President Zedillo established policies regarding increased punishment of organized crime, allowing "[wire taps], protected witnesses, covert agents and seizures of goods", and increasing the quality of law enforcement at the federal level. From 2001 to 2005, President Vicente Fox created the Federal Agency of Investigation . These policies resulted in

5250-517: The UK, it does not need to involve money, but any economic good . Courts involve money laundering committed by private individuals, drug dealers, businesses, corrupt officials, members of criminal organizations such as the Mafia , and even states. As financial crime has become more complex and financial intelligence is more important in combating international crime and terrorism, money laundering has become

5355-416: The United States market originated from Mexico, and by the 2000s, over 90% of the cocaine in the United States was imported from Mexico. In Colombia, however, there was a fall of the major drug cartels in the mid-1990s. Visible shifts occurred in the drug market in the United States. Between 1996 and 2000, US cocaine consumption dropped by 11%. In 2008, the US government initiated another program, known as

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5460-521: The United States to intervene in activities related to illegal drug transport in Latin America. Continuing into the 1980s, the United States instated stricter policy pertaining to drug transit through sea. As a result, there was an influx in drug-trafficking across the Mexico–US border , which increased the drug cartel activity in Mexico. By the early 1990s, so much as 50% of the cocaine available in

5565-633: The United States, had, as of 2011, the highest murder rate in the world. According to the International Crisis Group , the most violent regions in Central America, particularly along the Guatemala–Honduras border, are highly correlated with an abundance of drug trafficking activity. In several countries, the illegal drug trade is thought to be directly linked to violent crimes such as murder and gun violence. This

5670-464: The United States, around 195 cities have been infiltrated by drug trafficking that originated in Mexico. An estimated $ 10bn of the Mexican drug cartel's profits come from the United States, not only supplying the Mexican drug cartels with the profit necessary for survival, but also furthering America's economic dependence on drugs. With a large wave of immigrants in the 1960s and onwards, the United States saw an increased heterogeneity in its public. In

5775-518: The United States, drug cartels in Mexico see a $ 25–30 bn yearly profit, a great deal of which circulates through international banks such as HSBC . Drug cartels are fundamental in local economics. A percentage of the profits seen from the trade are invested in the local community. Such profits contribute to the education and healthcare of the community. While these cartels bring violence and hazards into communities, they create jobs and provide income for its many members. Major cartels saw growth due to

5880-501: The agreements between two financial institutions which fix the receiving agents of each counterparty in ordinary trades of some type. These agreements allow the related counterparties to make faster operations since the time used to settle the receiving agents is conserved. Limiting each subject to an SSI also lowers the likelihood of a fraud . SSIs are used by financial institutions to facilitate fast and accurate cross-border payments. Financial institutions in most countries operate in

5985-407: The arrests of major drug-trafficking bosses: Over the past few decades drug cartels have become integrated into Mexico's economy. Approximately 500 cities are directly engaged in drug trafficking and nearly 450,000 people are employed by drug cartels. Additionally, the livelihood of 3.2 million people is dependent on the drug cartels. Between local and international sales, such as to Europe and

6090-419: The banking industry from collapse. He claimed he had seen evidence that the proceeds of organized crime were "the only liquid investment capital" available to some banks on the brink of collapse during 2008. He said that a majority of the $ 352 billion (£216bn) of drug profits was absorbed into the economic system as a result: "In many instances, the money from drugs was the only liquid investment capital. In

6195-418: The central government as was done with the PRI party, drug cartels utilized new ways to distribute their supply and continued operating through force and intimidation. As Mexico became more democratized, the corruption fell from a centralized power to the local authorities. Cartels began to bribe local authorities, thus eliminating the structure and rules placed by the government—giving cartels more freedom. As

6300-425: The command of General Ghassan Bilal, the right-hand man of Maher al-Assad . The report also unearthed Hezbollah 's close participation in the drug production and smuggling networks. The Fourth Armoured Division, being an elite military unit permitted to move freely across Assad regime's checkpoints, oversees the smuggling operations from Syria, including the trafficking of cash, weapons, illegal drugs, etc. Days after

6405-747: The concealment or disguising of the nature of the proceeds; the acquisition, possession or use of property, knowing that these are derived from criminal acts; the participating in or assisting the movement of funds to make the proceeds appear legitimate. Money obtained from certain crimes, such as extortion , insider trading , drug trafficking , human trafficking , and illegal gambling is "dirty" and needs to be "cleaned" to appear to have been derived from legal activities, so that banks and other financial institutions will deal with it without suspicion. Money can be laundered by many methods that vary in complexity and sophistication. Money laundering typically involves three steps: The first involves introducing cash into

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6510-423: The constant effort by politicians to win the war on drugs , the US is still the world's largest importer of illegal drugs. Throughout the 20th century, narcotics other than cocaine also crossed the Mexican border, meeting the US demand for alcohol during the 1920s Prohibition , opiates in the 1940s, marijuana in the 1960s, and heroin in the 1970s. Most of the US imports of drugs come from Mexican drug cartels. In

6615-519: The continuous development of new markets. A large amount of drugs are smuggled into Europe from Asia. The main sources of these drugs are Afghanistan , along with countries that constituted the so-called Golden Crescent . From these producers, drugs are smuggled into the West and Central Asia to its destinations in Europe and the United States. Iran is now a common route for smugglers, having been previously

6720-711: The control of individual US states until the introduction of the Harrison Act in 1914, after 12 international powers signed the International Opium Convention in 1912. Between 1920 and c.  1933 the Eighteenth Amendment to the United States Constitution banned alcohol in the United States . Prohibition proved almost impossible to enforce and resulted in the rise of organized crime, including

6825-508: The creation of new platforms such as Silk Road 2.0, which were also shut down. Statistics about profits from the drug trade are largely unknown due to its illicit nature. An online report published by the UK Home Office in 2007 estimated the illicit drug market in the UK at £4–6.6 billion a year. In December 2009 United Nations Office on Drugs and Crime Executive Director Antonio Maria Costa claimed illegal drug money saved

6930-467: The demand for illicit drugs in certain areas of the United States. Large-scale drug trafficking is one of the capital crimes , and may result in a death sentence prescribed at the federal level when it involves murder. A large generation, the baby boomers , came of age in the 1960s. Their social tendency to confront the law on specific issues, including illegal drugs, overwhelmed the understaffed judicial system. The federal government attempted to enforce

7035-453: The departure of the DEA from Venezuela and the expansion of DEA's partnership with Colombia in 2005, Venezuela became more attractive to drug traffickers. Between 2008 and 2012, Venezuela's cocaine seizure ranking among other countries declined, going from being ranked fourth in the world for cocaine seizures in 2008 to sixth in the world in 2012. On 18 November 2016, following what was known as

7140-493: The drug cartels and allowed drug trafficking to grow under the protection of the government officials. During the 1990s, the PRI lost some elections to the new National Action Party (PAN). Chaos again emerged as elected government in Mexico changed drastically. As the PAN party took control, drug cartel leaders took advantage of the ensuing confusion and used their existing influence to further gain power. Instead of negotiating with

7245-471: The drug industry while weakening the efforts of law enforcement to monitor the flow of drug money into the legitimate economy. Cooperation among cartels expands their scope to distant markets and strengthens their abilities to evade detection by local law enforcement. Additionally, criminal organizations work together to coordinate money-laundering activities by having separate organizations handle specific stages of laundering process. One organization structures

7350-466: The drug was not previously popular." The effects of the illegal drug trade in the United States can be seen in a range of political, economic and social aspects. Increasing drug related violence can be tied to the racial tension that arose during the late 20th century along with the political upheaval prevalent throughout the 1960s and 70s. The second half of the 20th century was a period when increased wealth, and increased discretionary spending, increased

7455-457: The fighters of Bashar Assad's army . Interestingly, however, the quantities the country produces far exceed its own military’s demand. ... By some estimates, this business gives Syria more money than its entire legal export, and the regime constantly works to increase its profits, primarily by expanding its market reach. To this end, criminal gangs associated with Damascus or Hezbollah have built distribution networks for Captagon in countries where

7560-456: The financial system by some means ("placement"); the second involves carrying out complex financial transactions to camouflage the illegal source of the cash ("layering"); and finally, acquiring wealth generated from the transactions of the illicit funds ("integration"). Some of these steps may be omitted, depending on the circumstances. For example, non-cash proceeds that are already in the financial system would not need to be placed. According to

7665-466: The first decade of the 21st century as part of tightened border security in the wake of the September 11 attacks , border violence inside Mexico surged. The Mexican government estimates that 90% of the killings are drug-related. A report by the UK government's Drug Strategy Unit that was leaked to the press, stated that due to the expensive price of highly addictive drugs heroin and cocaine, drug use

7770-485: The former Soviet Union. The Eurasian Group on Combating Money Laundering and Financing of Terrorism (EAG) reported that the Russian Federation, Ukraine, Turkey, Serbia, Kyrgyzstan, Uzbekistan, Armenia and Kazakhstan have encountered a substantial shrinkage of tax base and shifting money supply balance in favor of cash. These processes have complicated the planning and management of the economy and contributed to

7875-475: The former opium-producing countries of Thailand , Iran , and Pakistan . After the 1990s, particularly after the end of the Cold War (1991), borders were opened and trading and customs agreements were signed so that the routes expanded to include China, Central Asia, and Russia. There are, therefore, diversified drug trafficking routes available today, particularly in the heroin trade and these thrive due to

7980-497: The growth of the shadow economy . Many regulatory and governmental authorities issue estimates each year for the amount of money laundered, either worldwide or within their national economy. In 1996, a spokesperson for the IMF estimated that 2–5% of the worldwide global economy involved laundered money. The Financial Action Task Force on Money Laundering (FATF), an intergovernmental body set up to combat money laundering, stated, "Due to

8085-545: The illegal nature of the transactions, precise statistics are not available and it is therefore impossible to produce a definitive estimate of the amount of money that is globally laundered every year. The FATF therefore does not publish any figures in this regard." Academic commentators have likewise been unable to estimate the volume of money with any degree of assurance. Various estimates of the scale of global money laundering are sometimes repeated often enough to make some people regard them as factual—but no researcher has overcome

8190-493: The inherent difficulty of measuring an actively concealed practice. Regardless of the difficulty in measurement, the amount of money laundered each year is in the billions of US dollars and poses a significant policy concern for governments. As a result, governments and international bodies have undertaken efforts to deter, prevent, and apprehend money launderers. Financial institutions have likewise undertaken efforts to prevent and detect transactions involving dirty money, both as

8295-443: The jurisdictions they operate. Reverse money laundering is a process that disguises a legitimate source of funds that are to be used for illegal purposes. It is usually perpetrated for the purpose of financing terrorism but can be also used by criminal organizations that have invested in legal businesses and would like to withdraw legitimate funds from official circulation. Unaccounted cash received via disguising financial transactions

8400-400: The large amount of baby boomers, commercial marijuana use was on the rise. This increased the supply and demand for marijuana during this time period. Corruption in Mexico has contributed to the domination of Mexican cartels in the illicit drug trade. Since the beginning of the 20th century, Mexico's political environment allowed the growth of drug-related activity. The loose regulation over

8505-429: The last available year according to the United Nations Office on Drugs and Crime . Proportion of unreported money laundering and definition of money laundering might differ between countries. Drug trafficking The government of the Qing dynasty issued edicts against opium smoking in 1730, 1796 and 1800. The West prohibited addictive drugs throughout the late 19th and early 20th centuries. Beginning in

8610-627: The law, but with meager effect. Marijuana was a popular drug seen through the Latin American trade route in the 1960s. Cocaine became a major drug product in the later decades. Much of the cocaine is smuggled from Colombia and Mexico via Jamaica. This led to several administrations combating the popularity of these drugs. Due to the influence of this development on the US economy, the Reagan administration began "certifying" countries for their attempts at controlling drug trafficking. This allowed

8715-651: The modern American Mafia , which identified enormous business opportunities in the manufacturing, smuggling and sale of illicit liquor. The beginning of the 21st century saw drug use increase in North America and Europe, with a particularly increased demand for marijuana and cocaine . As a result, international organized crime syndicates such as the Sinaloa Cartel and 'Ndrangheta have increased cooperation among each other in order to facilitate trans-Atlantic drug-trafficking. Use of another illicit drug, hashish , has also increased in Europe. Drug trafficking

8820-476: The past decade to launder funds. A mixer blends the cryptocurrencies of many users together to obfuscate the origins and owners of funds, enabling a greater degree of privacy on public blockchains like Bitcoin and Ethereum . Although not explicitly illegal in many jurisdictions, the legality of mixers is controversial. The use of the mixer Tornado Cash in the laundering of funds by the Lazarus Group led

8925-487: The past, the term "money laundering" was applied only to financial transactions related to organized crime . Today its definition is often expanded by government and international regulators such as the US Office of the Comptroller of the Currency to mean "any financial transaction which generates an asset or a value as the result of an illegal act," which may involve actions such as tax evasion or false accounting . In

9030-416: The practice of engaging in financial transactions to conceal the identity, source, or destination of illegally gained money. In United Kingdom law, the common law definition is wider. The act is defined as "the process by which the proceeds of crime are converted into assets which appear to have a legitimate origin, so that they can be retained permanently or recycled into further criminal enterprises". In

9135-408: The process of how financial transactions will be laundered, while another criminal group provides the "dirty" money to be cleaned. By fostering expansion of trade and global transportation networks, free trade encourages cooperation and formation of alliances among criminal organizations across different countries. The drug trade in Latin America emerged in the early 1930s. It saw significant growth in

9240-501: The publication of the joint BBC-OCCRP documentary; Assad government banned all activities of BBC media outlets and entry of affiliated media personnel in Syria. The extensive involvement of Syrian Armed Forces in sponsorship of drug production and trade has led to pervasive drug addiction problems amongst pro-Assad soldiers. In many instances, military officials encourage the soldiers to consume Captagon and other illegal drugs, leading to overdose or drug abuse. Pro-Assad fighters in

9345-404: The record-keeping capabilities of Internet service providers and other network resource maintainers tend to frustrate that intention. While some cryptocurrencies under recent development have aimed to provide more possibilities of transaction anonymity for various reasons, the degree to which they succeed — and, in consequence, the degree to which they offer benefits for money laundering efforts —

9450-446: The respective NFT to a third party. According to a report by Chainalysis , these types of wash trades are becoming increasingly popular among money launderers especially due to the largely anonymous nature of transactions on NFT marketplaces. Auction platforms for NFT sales may face regulatory pressure to comply with anti-money laundering legislation. Additionally, cryptocurrency mixers have been increasingly used by cybercriminals over

9555-432: The second half of 2008, liquidity was the banking system's main problem and hence liquid capital became an important factor ... Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities...there were signs that some banks were rescued that way". Costa declined to identify countries or banks that may have received any drug money, saying that would be inappropriate because his office

9660-719: The seizure of approximately nine million devices and drugs, including large quantities of fake COVID-19 tests and face masks. The countries of drug production and transit are some of the most affected by the trade, though countries receiving the illegally   imported substances are also adversely affected. For example, Ecuador has absorbed up to 300,000 refugees from Colombia who are running from guerrillas, paramilitaries and drug lords. While some applied for asylum, others are still illegal immigrants. The drugs that pass from Colombia through Ecuador to other parts of South America create economic and social problems. Honduras , through which an estimated 79% of cocaine passes on its way to

9765-589: The sheer volume of legal cross-border trade and provides cover for drug smuggling—by providing ample opportunity to conceal illicit cargo in legal trade. While international free trade continues to expand the volume of legal trade, the ability to detect and interdict drug trafficking is severely diminished. Towards the late 1990s, the top ten seaports in the world processed 33.6 million containers. Free trade has fostered integration of financial markets and has provided drug traffickers with more opportunities to launder money and invest in other activities. This strengthens

9870-471: The smuggling of other goods (i.e. wildlife) and even people. In many cases, links between politicians and the criminal organisations have been proven to exist. In June 2021, Interpol revealed an operation in 92 countries that shut down 113,000 websites and online marketplaces selling counterfeit or illicit medicines and medical products a month earlier, led to the arrests of 227 people worldwide, recovered pharmaceutical products worth $ 23 million, and led to

9975-432: The structure and operation of the illicit drug industry is described mainly in terms of an international division of labor. Free trade can open new markets to domestic producers who would otherwise resort to exporting illicit drugs. Additionally, extensive free trade among states increases cross-border drug enforcement and coordination between law enforcement agencies in different countries. However, free trade also increases

10080-434: The surge in digital asset late 2010s, there's been a noticeable rise in money laundering and fraud tied to cryptocurrency. In 2021 alone, cybercriminals managed to secure US$ 14 billion in cryptocurrency through various illicit activities. Chinese organized criminal groups have become the principal money launderers for drug cartels in Mexico, Italy, and elsewhere. Money laundering is the conversion or transfer of property;

10185-499: The total captagon exports of the drug cartels linked to the Assad regime. In 2020, Italian police seized 84 million captagon pills originating from Syrian ports while intercepting a single shipment. In June 2023, US State Department 's Bureau of Near Eastern Affairs published a detailed report to the US Congress , elucidating a strategy to eliminate the narcotics production, drug trafficking and drug cartel networks affiliated with

10290-450: The transmission of funds through the financial system (although money laundering relates to where the money has come from , and terrorist financing relating to where the money is going to ). Finally, people, vessels, organisations and governments can be sanctioned due to international law-breaking, war (and of course tit-for-tat sanctions), and still want to move funds into markets where they are persona non grata . Transaction laundering

10395-538: The transportation of illegal drugs and the failure to prosecute known drug traffickers and gangs increased the growth of the drug industry. Toleration of drug trafficking has undermined the authority of the Mexican government and has decreased the power of law enforcement officers in regulation over such activities. These policies of tolerance fostered the growing power of drug cartels in the Mexican economy and have made drug traders wealthier. Many states in Mexico lack policies that establish stability in governance. There also

10500-516: The world upgraded money laundering laws and surveillance and monitoring systems of financial transactions. Anti-money laundering regulations have become a much larger burden for financial institutions and enforcement has stepped up significantly. During 2011–2015 a number of major banks faced ever-increasing fines for breaches of money laundering regulations. This included HSBC , which was fined $ 1.9 billion in December 2012, and BNP Paribas , which

10605-535: Was fined $ 8.9 billion in July 2014 by the U.S. government. Many countries introduced or strengthened border controls on the amount of cash that can be carried and introduced central transaction reporting systems where all financial institutions have to report all financial transactions electronically. For example, in 2006, Australia set up the AUSTRAC system and required the reporting of all financial transactions. With

10710-406: Was one of the highest in the nation—four times the national homicide average. This crime rate was correlated with regions with low employment and was not entirely dependent on ethnicity. The baby boomer generation also felt the effects of the drug trade in their increased drug use from the 1960s to 80s. Along with substance use, criminal involvement, suicide and murder were also on the rise. Due to

10815-479: Was one of the main Ba'athist military divisions that was engaged in perpetrating brutal crackdowns and mass violence against protestors across the country. In 2018, Bashar al-Assad assigned Maher as the commander of the 4th Armoured Division, a military unit that supervised Assad regime's criminal enterprises like smuggling, drug trafficking, narcotics production and plunder of goods and resources. Under Maher's supervision,

10920-436: Was only implemented in the 1980s. Organized crime received a major boost from Prohibition and a large source of new funds that were obtained from illegal sales of alcohol. The successful prosecution of Al Capone on tax evasion brought in a new emphasis by the state and law enforcement agencies to track and confiscate money, but existing laws against tax evasion could not be used once gangsters started paying their taxes. In

11025-821: Was responsible for the great majority of crime, including 85% of shoplifting, 70–80% of burglaries and 54% of robberies. It concluded "[t]he cost of crime committed to support illegal cocaine and heroin habits amounts to £16 billion a year in the UK" Heroin is increasingly trafficked from Afghanistan to Europe and America through eastern and southern African countries. This path is known as the "southern route" or "smack track". Repercussions of this trade include burgeoning heroin use and political corruption among intermediary African nations. Cocaine produced in Colombia and Bolivia increasingly has been shipped via West Africa (especially in Nigeria , Cape Verde , Guinea-Bissau , Cameroon , Mali , Benin , Togo , and Ghana ). The money

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