Question

Is there any correlation between cybercrime and techniques used to launder money?

Answer 1

Is there any correlation between cybercrime and techniques used to launder money?

Money Laundering means:-

Money laundering is the process of creating the appearance that large amounts of money obtained from criminal activity, such as drug trafficking or terrorist activity, originated from a legitimate source. The money from the illicit activity is considered dirty, and the process "launders" the money to make it look clean.

Money laundering is essential for criminal organizations who wish to use illegally earned money effectively. Dealing in large amounts of illegal cash is inefficient and dangerous. The criminals need a way to deposit the money in financial institutions, yet they can only do so if the money appears to come from legitimate sources.

There are three steps involved in the process of laundering money: placement, layering and integration. Placement refers to the act of introducing "dirty money" (money obtained through illegitimate, criminal means) into the financial system in some way. Layering is the act of concealing the source of that money by way of a series of complex transactions and bookkeeping tricks. Integration refers to the act of acquiring that money in purportedly legitimate means.

Cyber Crime Means:-

Cybercrime is defined as a crime in which a computer is the object of the crime (hacking, phishing, spamming) or is used as a tool to commit an offense (child pornography, hate crimes). Cybercriminals may use computer technology to access personal information, business trade secrets or use the internet for exploitative or malicious purposes. Criminals can also use computers for communication and document or data storage.

Following are relationship between money laundering and cyber crime

Criminals are increasingly using the internet to turn dirty money into a white money by using online gaming, cryptocurrencies and micro-payments to launder money

The oldest physical placement methods of money launderers, including cash smuggling, casinos and other gambling venues, insurance policies and shell corporations, but that a number of new web-based systems are emerging such as online gaming, cryptocurrencies and micro-payments.

Criminals convert the bad money into Digital currency like bitcoin or liberty reserve dollar which could be sent and received anonymously. The receiver can then convert the Liberty Reserve currency back into cash for a small fee.

The online role playing games provide "an easy way for criminals to launder money". This tends to involve opening numerous different accounts on various online games -- such as Second Life and World of Warcraft -- to move money. These games use credits that players can exchange for real money. By using the virtual currency systems, criminals can send virtual money to associates in another country, which can then be transferred into real money.

Another way is "micro-laundering" via sites like PayPal or using job advertising sites. Micro-launching involves moving a large amount of money in small amounts through thousands of electronic transactions. One way of doing this is using mobile banking systems such as MPesa, Kenya's mobile wallet, which allows you to send money from prepaid mobile cards to criminal partners that will convert the credit into cash anonymously.

Then there are the money mule scams. Most people will be familiar with the spam in which a high level official from a developing country asks your help to transfer significant amounts of money and are prepared to pay well for the services

Another scam is to offer people jobs in which they can make a substantial income working from home. However, the ‘job’ involves accepting money transfers into their accounts and then passing these funds on to an account set up by the employer. In other words, money laundering!

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