Money Laundering: A Study of Its Development, Uses and Auditing Techniques Useful in Its Detection

Date of Submission

1993

Document Type

Thesis

Degree Name

Master of Science in Accounting

Department

Accounting

Advisor

Michael Rolleri

LCSH

Money laundering, Money --Law and legislation --Criminal provisions.

Call No. at the Univ. of New Haven Library

AS 36 N 29 ACC 1993 NO .1

Abstract

Money laundering has been the subject of much Congressional and law enforcement efforts. Congress first attempted to create a series of reporting requirements, with criminal sanctions for non compliance, and more recently decided to criminalize money laundering itself. Many economists have computed estimates of the $100's of billions of un-taxed proceeds that flow from an ever growing underground economy. Estimates of the cash .generated by the illegal drug trade alone in the United States exceed the combined profits of all the Fortune 500 companies. There are many other illegal currency, generating activities including illegal gambling, loansharking and false invoicing schemes. The common denominator in these activities-is the almost exclusive use of cash and the desire for no paper trail. The art and practice of "money laundering" has been prevalent since the days of prohibition. Criminals and sophisticated tax evaders have forever attempted to conceal their ill-gotten wealth and illegal activities through disguised financial transactions. Money can be laundered both internationally and domestically, through financial transactions involving both U.S. and foreign banks and corporations. This thesis is an in-depth study of this phenomenom and will provide a detailed picture of the social and economic factors which have caused it to develop. The variety of uses being made to launder funds, the laws concerning the activity, the actions and attitudes of the law enforcement community towards it as well as the auditing techniques useful in its detection within the business community, are explored. I analyze a variety of data from sources within various government agencies who are dealing with this activity. In addition the U.S. statutes and their applicability to the crimes-associated with money laundering as well as the illegal activities which give rise to its use are analyzed. Also, auditing techniques which can uncover some of the various schemes employing money laundering, as well as the laundering itself, will be discussed. This thesis provides a comprehensive view of money laundering and its involvement in illegal and legal business enterprises and details the various laws and regulations applicable to money laundering schemes.

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