Financial Crime Series I: Money Laundering

Anyone who works in Finance is all too familiar with increasing regulations. These are put in place in order to prevent illegal activity, though financial crime continues to be a huge problem throughout the world.

One of the most egregious types of financial crime is money laundering, which is the subject of today’s post.

Mr. Accountant dropped his briefcase on his desk and slumped into a chair.
Maybe he should say something. Then again, what could he say? No one would listen to a worried accountant… not until it was too late. 
Nonetheless, the signs were all too clear. Ad hoc payments. Strange receipts. Disconnected phone numbers, shady looking men who walked in to see the boss without an appointment. Sure, the business was turning over a decent profit, but…
It didn’t make sense.

Money launderers profit from criminal activity, concealing the source of their funds through legitimate enterprises. This is often based in greed, though as I mentioned in my previous post, it can also be related to other causes such as religious extremism. For example, money laundering is often linked to terrorist financing, a growing concern for governments and financial systems.

Money laundering works in 3 stages:

1- Placement

The criminal acquires the funds and deposits them into the financial system.

2- Layering

The criminal makes numerous transactions to obscure the link between the dirty money and its source.

3- Integration

The criminal retrieves the funds through what appear to be legitimate sources.

EXAMPLE:

Mr X sells cocaine. Since he also owns a shop, he’s able to deposit the funds into his cash register (Placement). He then writes false receipts “proving” that this money came from ordinary sales (Layering). Later, he pays himself a salary from the criminal funds (Integration).

Like most financial crime, money laundering has evolved greatly in the Internet Age.  It’s a worldwide crime– many countries from England to Russia to Afghanistan are hotspots for money laundering.

Motivation

In a crime fiction novel, the detective would be responsible for tracking down the money launderer(s). Keep in mind that this can be a dull job – for example, my work in the financial sector involves checking every transaction on clients’ bank statements and questioning large deposits.  Doesn’t sound too exciting, does it? Your detective needs an urgent reason for pursuing the criminals), something that will provide creative tension.

Example: your criminal is a drug dealer who funnels cash through a shop. On the surface, this is just standard money laundering… but what if he sells drugs to a prominent politician who’s campaigning on an anti-drugs platform? Your detective will have the double task of exposing the politician and tracking down the dirty money, making your story much more compelling. You could even take it further (i.e. this same drug dealer sold drugs to the detective’s partner, who later died of an overdose).

Location

Location is key. This can be a disadvantage since a lot of money laundering involves business transactions, but don’t be discouraged! With a little ingenuity, you can add tension and limitations through the setting. How about a luxury shipping company running on money from prostitution? A golf club supplementing its income with contraband sales? Money launderers will use any mechanism available to them, and so can you.

Introduction

When do you introduce the crime? There’s no right or wrong answer, but remember that your detective needs a personal connection to each and every case. You may want to begin with a different crime and have your detective follow the money trail. Or they could receive warnings from a worried accountant, then get blindsided by another crime halfway through. The challenge would then be to prove that this crime was committed using laundered funds.

Don’t shy away from introducing relatives and friends of the detective, or from making them links in the money laundering chain. Money laundering requires willing participants, even if they don’t recieve a share of the funds.

You’ll want to remember what’s at stake, and not just for the criminal. Anyone who works in finance can easily be penalized as a result of a money laundering scheme. For example, brokers in the UK risk imprisonment if they fail to report suspicious activity or potential suspects. Other countries are strengthening their laws, too, so be sure to incorporate that reality into your work.

Methodology

How does the detective go about tracking down the money trail, considering that bank statements aren’t publicly accessible? They could have an ally within the business or apply for a Court Order to release crucial information (though the latter is often a lengthy process). Perhaps they work directly with the enterprise, posing as a willing accomplice, or they might even steal the information.

The last two in particular are sure to raise the stakes – you’d have a double problem, since both criminal and detective would be breaking the law.

Money-laundering can (and often does) entrap innocent people. When this happens, be sure to explore the devastating effects. Also consider the wider economic ramifications of the crime, and make sure your detective suffers consequences as a result of the criminal’s activity. This will give them a personal grievance as well as a legal one.

Keep in mind that motivation is the most important factor of all. Raise the stakes, create a strong sense of urgency, and your readers will be hooked from start to finish.

Have you read any books on the topic of money laundering? Do you have any other thoughts you’d like to share? Feel free to comment below!

Author: Deborah

Deborah blogs at Story Scribes. She loves Victorian murder mysteries, steak, and Mathematics. Not all at the same time.

3 thoughts on “Financial Crime Series I: Money Laundering”

  1. Really nice! I appreciate the examples you gave; it made the whole thing a lot easier to grasp. I knew what money laundering is in a vague sense but this paints a much clearer picture. Thank you!

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