Money laundering is a serious problem worldwide, involving vast sums of money. It can be defined as a process whereby the proceeds of illegal activities are channelled into lawful commercial dealing in an attempt to conceal the source of the money, and
- create the impression that the money has been obtained legitimately
- A typical example is where a person buys immovable property using money obtained from drug trafficking or another criminal activity. The property is renovated or improved upon (again using the proceeds of crime) and thereafter sold at a substantial profit.
The profit now has the appearance of legitimacy. By repeating the process the money launderer may eventually succeed in effectively concealing the true source of his or her wealth.
Most countries have introduced measures in some form or other to combat organised crime in general and money laundering in particular.
In South Africa two Acts have been passed in this respect, namely the Prevention of Organised Crime Act 121 of l998 and the Financial Intelligence Centre Act 38 of 2001 (FICA).
Contravention of the Act constitutes an offence and stiff penalties can be imposed on accountable institutions that fail to comply with their duties under the Act.
The FICA lays down that Estate Agents are obliged to obtain certain information from Sellers when listing their properties prior to any transaction being concluded.