Money laundering is the term used to cover the process of converting illegal proceeds into what appear to be legitimate funds. Though not a fraud itself, money laundering is closely linked with fraud, as it is the mechanism by which the proceeds of crime are distributed. Examples of such linkage could include obtaining products, services or bank loans against assets derived from criminal activities or issuing company cheques to third parties and those parties subsequently issuing cheques to a company.
Due to the clandestine nature of laundering activity and the different options for transferring money gained from crime, including informal person-to-person transfer systems, such as 'Hawala', it is hard to accurately quantify the amount of money laundered each year. However, the International Monetary Fund estimates that the amount of money laundering occurring on a yearly basis could range between 2 and 5 percent of the world's Gross Domestic Product - or somewhere between US$600 billion and US$1.5 trillion, of which half is being laundered through U.S. banks. About US$ 200bn per annum is transferred through financial networks like Hawala.
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