Money laundering is the process of transforming the earnings made out of crime into seemingly legitimate money or other assets. However, in a number of legal and regulatory systems, the term money laundering has become synonymous with other forms of financial crime, and sometimes used more generally to include misuse of the financial system involving things such as securities, digital currencies,  credit cards, and traditional currency, including terrorism financing and fudging of international sanctions. Most anti-money laundering laws dig into finding source of funds and destination from where the money in pumped in the system. These days we see that one of the aims of money laundering is to finance terrorists’ activities. In the common sense, money laundering means converting money acquired through illegal means where taxes are not paid, profits from selling illegal goods/services into legally-acquired income.

Anywhere between $500 billion and $1 trillion money is laundered worldwide every year. On the socio-cultural end of the successful laundering money means that criminal activity actually does pay off. This success encourages criminals to continue their illegitimate schemes because they get to spend the profit with no consequences. This means more fraud, more corporate misuse (which means more workers losing their pensions when the corporation collapses), more drugs on the streets, more drug-related crime, law-enforcement resources stretched beyond their means and a general loss of morale on the part of legitimate business people who don’t break the law and don’t make nearly the profits that the criminals do. The economic effects are on a broader scale.

Developing countries often bear the burden of modern money laundering because those governments are still in the process of establishing regulations for their newly privatized financial sectors. This makes them a prime target. In the 1990s, numerous banks in the developing Baltic States ended up with huge, widely rumoured deposits of dirty money. Bank patrons proceeded to withdraw their own clean money for fear of losing it if the banks came under investigation and lost their insurance. The banks collapsed as a result. Other major issues facing the world’s economies include errors in economic policy resulting from artificially inflated financial sectors. Massive influxes of mucky cash into particular areas of the economy that are desirable to money launderers create false demand, and officials act on this new demand by adjusting economic policy. When the laundering process reaches a certain point or if law-enforcement officials start to show interest, all of that money will suddenly disappears without any predictable economic cause.

Some problems on a more local scale relate to taxation and small-business competition. Laundered money is usually untaxed, meaning the rest of us ultimately have to make up the loss in tax revenue. Also, legitimate small businesses can’t compete with money-laundering front businesses that can afford to sell a product for cheaper because their primary purpose is to clean money, not turn a profit. They have so much cash coming in that they might even sell a product or service below cost.

From where does the dirty money come? Money is obtained from certain crimes, such as extortion, insider trading, drug trafficking and illegal gambling.  It needs to be cleaned to appear to have been derived from legal activities so that banks and other financial institutions will deal with it without suspicion. Money can be laundered by many methods, which vary in complexity and deception. Different countries may or may not treat payments in breach of international sanctions as money laundering. Some jurisdictions differentiate these for definition purposes, and others do not. Some jurisdictions define money laundering as disguising sources of money, either intentionally or by merely using financial systems or services that do not identify or track sources or destinations.

Other jurisdictions define money laundering to include money from activity that would have been a crime in that jurisdiction, even if it were legal where the actual conduct occurred. There are smart financial brains involved in laundering money in the world.

Stages of money laundering:

Placement: This involves physically placing illegal money into the financial system or the retail economy. The “dirty” money is most susceptible to detection and seizure during placement.

Layering:  means separating the illegally obtained money from its source through a series of financial transactions that makes it difficult to trace the origin. During the layering phase of money laundering, criminals often take advantage of legitimate financial mechanisms in attempts to hide the source of their funds.  Few of the many mechanisms that are used are  currency exchanges, wire transmitting services, prepaid cards that offer global access to cash via automated teller machines and goods at point of sale, casino services and domestic shell corporations lacking real assets and business activity that are set up to hold and move illicit funds.

Integration: The final stage is converting the illicit funds into a seemingly legitimate form. Integration may include the purchase of businesses, automobiles, real estate and other assets.

A common way of legalizing illicit funds is by setting up various businesses that exist for the sole purpose of blending dirty money with legitimate incomes. While the companies set up are legal in nature and can operate like ordinary businesses, they can overstate their income, which comes from over-invoicing to allow inflow of ‘dirty’ money. Businesses that are on cash basis like nightclubs make the inflow even more difficult to trace. Shell companies (a company without active business operation of significant assets) that are set up without any significant assets or operations can also be used for money laundering. These companies simply create fake transactions similar to normal businesses to allow inflow of cash. The funds can be cycled in a few more companies before reaching your pocket as legitimate cash. Other common sources are chain of convenience stores and ironically even banks, and yes antique stores and art galleries, spa, salons, fitness clubs etc.  These are all business that regularly transact business in cash and that are highly prized by people wishing to conceal the origin of their funds.

If the type of money is in large denomination, then discounting trade is the best business. Example would be to buy goods and sell them at 5%-10% lower.
For electronic money or money that is black or grey in a system, there are literally 100s of ways to whiten the money. These days, off-shore channels are used to whiten the money by investing in investment vehicles in other countries, specifically to whiten money. This is called an amnesty scheme (to bring more people into the tax bracket). A lot many people, who are aware of such avenues, regularly take advantage of it.

Over the past several years the banking industry, financial institutions, and the financial services industry have made significant improvements in detecting money laundering and preventing it. However, they continue to be susceptible to misuse by criminal elements for laundering illegally obtained profits and funds intended to finance terrorist activities. Money-laundering methods have become more creative; the criminals are intelligent people and some are highly qualified, their strategies for money trafficking cannot be challenged.   In the early nineties money laundering became prominent business due to the expansion of markets, cross border business alliances, more products and services, more difficult financial relationships, advances in technology, and the increased pace of money flows worldwide. The more technology advances, the more people find loopholes in the system. The entire world requires to come together to prevent money laundering. Is the world ready for transparency and precision? This is the most important question which needs to be answered.

About two decades back when manufacturing dominated almost all progressive countries such as the UK, the US, France and Germany, the physical layout of production units such as factories was not very important to the end consumer because they never went inside the factory. However, today’s consumers are keen to know how goods are processed, what goes into it, how safe is the product for usage, the package, aesthetics etc besides the price of course. Today customers are becoming very demanding because of the dominance of e-commerce and retail chains in supply chain, and ever increasing substitution of products available to them.

The entire value chain is stressed to offer various facets in the product and that too for a multiple segments. Today’s customer seeks high level of presentation in the retail outlets; the retail business literally depends on visual merchandise for a perfect presentation, customers want to easily find their way around the store, and want an enjoyable shopping experience.

The importance of quality physical layout is important in a range of service providers, including: students going to college or university have far higher expectations about the quality of their accommodation, mentoring, and learning environment than in the past. As a result colleges and universities are forced pay far more attention to creating attractive learning environments, student accommodation, shops, libraries, playgrounds, bars and other facilities; which is of course good.

Air passengers expect attractive and stimulating environments, such as plush departure lounges, with activities for young children, good food on flight and efficient flight attendants.

Hair dressing and beauty salons are expected to provide pleasant waiting areas, with attractive reading materials, access to coffee for customers, good music and of course good beauty products and efficient beauticians.

While the fact is nobody likes to go to hospitals; but when they need to go patients these days expect services of five star hotels, good lounges, restaurants, helping and positive attitudes of healthcare workers, cleanliness and all under one roof services. If organizations ignore marketing, they find themselves lagging behind.

The man behind the four Ps was Jerome McCarthy. He suggested the 4 Ps classifications in 1960. McCarthy emphasized on product, price, place and promotion as the main four elements and just few about years back, Philip Kotler talked about shift from the four Ps to four Cs.  He expressed in one of his interview that the 4Ps have become 4 Cs because of the customer imperative, the value challenge, and the increasing value of mega distribution. The skills and talents of the marketing manager recline in making the offer to customers in the most attractive manner.  The Marketing Manager is no less than an artist; he has to proportionately add, subtract, replace, and centralize the elements of the mix – The Product; The Price; The Place and The Promotion. Hence, the marketing mix is a value-delivering tool of the marketing function.

One of the glaring challenges that most brands across the world face today is of lowering brand loyalty from the consumers.  The brands are ‘commoditized’ no sooner they enter markets.  At the consumer level, on one hand we are seeing an increasingly more globalised consumer – one who is tuned in almost real time to trends and aspirations across the globe.  Increased access to electronic and traditional media, the Internet, and more frequently (and more adventurous) travel outside the home frontiers are some of the factors that have led to the globalization of the average consumer. At the business level, the most challenging development is consolidation across all kinds of industries – be it travel, education, health, transportation, telecommunication, banking, consumer durables, or retail. The consolidation is not limited within the traditional geographical boundaries but is increasingly becoming cross-national and cross-continent; as a result, local and national brands are struggling literally to retain their identities in the consumer’s mind share. Many brands are living a very short shelf life.

The evolution has been brought in fundamental changes to the basic Marketing mix. Where once there were 4 P’s to explain the mix, nowadays 3 more Ps have added to layer of depth.

In the late 70’s it was widely acknowledged by marketers that the Marketing Mix should be updated. This led to the creation of the Extended Marketing Mix in 1981 by Booms & Bitner which added 3 new elements to the 4 P’s. The older 4Ps and 3 more new Ps of marketing mix are extended to both tangible and intangible products.

The extended 3 Ps are as follows:

People: Organizations are reliant on the people right from shop floor to the Managing Director. Having the right people is crucial because they are as much a part of business offering as the products/services offered by the organization. The three main tasks for employee engagement are: culture, managing style, and hiring. The performance and attitude of people can result in the success or failure of a business.

Processes: The delivery of a product or service is usually done with the best of management practice. The thumb rule for success of any product is that when the customer pays for the product/service he should feel satisfied. Most competitive organizations use 6 SIGMA tool for optimizing best product output. Continuous efforts to achieve stable and predictable process results by reducing process variation. Manufacturing and business processes have characteristics that can be measured, analyzed, controlled and improved. Achieving sustained quality improvement requires commitment from the entire organization. This happens particularly from top-level management. Six Sigma project helps a clear focus on achieving measurable and quantifiable financial returns. 6 Sigma works efficiently when an increased emphasis is laid on strong and passionate management. It doesn’t give room for assumptions and guess work.

Physical Evidence:  This refers to the way a product, service, and everything about the company, appears from the outside, or is perceived by the customer. The physical evidence is about packaging. It is about the presentation of an organization, person or thing in an advantageous way. In physical packaging the size, shape, color, material, UPC bar code, and label of the packaging matters as much as its aesthetics. This should be customer tested and updated when needed.  It should fall in line with organization’s other product offerings as well.  Packaging involves the visual layout, practical setup, and when needed for products, clear and precise installation instructions. Product liability insurance is needed in case anybody suffers any harm from the product. Engineering tests are also needed to make sure that the package can stand any break.  There may also be regulatory issues to consider. Visual packaging of a tangible product can make or break a purchase.  Small improvements in the packaging or external appearance of the product or service can lead to completely different responses from customers.

Is there place for 8^thP?  Some marketing experts are of opinion that the extended marketing mix should evolve of Productivity. It is about how well people combine resources to produce goods and services. It is about creating more from available resources, such as raw materials, labour, skills, capital equipment, land, intellectual property, managerial potential and finance. With the right combination, higher production, higher value and higher incomes can be achieved for every hour worked. Productivity helps in managing costs.

In conclusion, even after 54 years the original marketing mix cannot be ignored. It is applicable for every business every day. Jerome McCarthy’s well thought 4 Ps – Product, Price, Place and Promotion and additional 3 Ps added in 1981 by Booms & Bitner’s People, Process and Physical Evidence are the core of any business.  In my opinion, the 8^th P – Productivity should also be added to the extended marketing mix. And, a good marketer is the one who adapts the Ps  suitably to his offering.