Present day business world is characterized with dynamism that prompts business people to review their policies, programs, and procedures in order to sustain viability in this industry. Tremendous development in IT and globalisation makes information sharing easy which has both positive and negative implications on business. The ethical dimension of business comes to test with numerous challenges. Money laundering is one such challenge facing the present day and future business fraternity. This paper examines money laundering and the implications it poses on business.
Economists define money laundering as a money based transaction scheme whose goal is to hide the origin, identity and the terminus of illegally obtained money. This activity can be broken into three major stages. The first stage entails an illegal transaction that obtains the cash and hands it to a launderer. In the second stage, this launderer channels the money via a complicated transactional scheme with the aim of obscuring the one who got the money from the criminal firm. During stage three, the scheme takes back the money to the launderer in an unclear and indirect manner.
HSBC, a leading financial institution based in London faces sharp criticism for failing to detect and crack down massive money laundering activities in the US that happened between 2004 and 2010. This money laundering is heavily linked to terrorism and drug trafficking. This illegal activity got at its peak during management transition at HSBC and the former management is likely to be blamed for this.
Money laundering brings forth propagation of illegal activities such as terrorism and drug trafficking. On the side of the bank, exposed undetected laundering tarnishes the corporate image in the market affecting the business. HSBC shares for instance fell by over 2% since the revelation of this activity. In response to this, the bank spends more in monitoring and compliance to the tune of $400million.
Money laundering subjects the business world to several challenges as it injects dirty cash into the economy. The value of money suffers adverse effects due to the inception of this money. Strict measures need development to help salvage the business field from present and future effects occasioned by money laundering.
References
Anonymous, (2012). Money Laundering. Retrieved Feb 06, 2013, from law.cornell.edu:
http://www.law.cornell.edu/wex/money_laundering
Hopton, D. (2009). Money Laundering: A Concise Guide for All Business. Texas: Gower
Publishing, Ltd.
