Money laundering operations by criminal organisations can involve businesses the public administration and large banks working together to give a legal appearance to money obtained illegally. Juan Carlos Galindo, an expert in the prevention of money laundering and terrorist financing, explains the mechanisms money launderers use.

Almost three-quarters of criminal networks in the European Union use some form of money laundering to finance their operations and hide their assets. These transactions are estimated to have a total value of between 117 and 210 billion euros in the EU.

The main purpose of money laundering is to legalise the proceeds of criminal activity. It can be a relatively simple process carried out locally or nationally, or a very sophisticated process involving numerous intermediaries in several jurisdictions using the international financial system.

In an interview on the “ConPdePodcast” programme, Juan Carlos Galindo, an expert in the prevention of money laundering and terrorist financing, describes in detail how money is laundered. He begins by explaining the possible origins of this term: one that attributes the concept to Al Capone, who bought a chain of laundromats to use them as a legal front to recycle the money obtained from his criminal activities and another that mentions a Colombian method of counterfeiting American banknotes.

Galindo explains that there are three stages in money laundering – placement, transformation, and integration – and gives some practical examples:

1. Placement: This represents the first step in integrating the proceeds of crime into the legitimate financial system. This can be done through shell businesses, such as restaurants or cafés, which appear to have legitimate income.

2. Transformation: Layering or transformation involves converting the money into various financial or real estate assets to distance its illicit origin. This includes buying stocks, bonds, property and other assets through different companies.

3. Integration: The third and final stage of the laundering process aims to bring the money back into the market as apparently licit capital, allowing the criminal to make use of this money without arousing suspicion.

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