stop money laundering (Grosse, 2001, p. 5). During the integration stage, funds are
incorporated into the legal economy (Schneiderand Windischbauer, 2008,p.394;Arzt et al.,
2009,p.686;Trechsel, 1997, p. 14). Successful money laundering makes it difﬁcult or
impossible for authoritiesto trace the illicit origins of funds (Gao and Xu, 2009, p. 1,494).
Because compliance efforts focuson the ﬁnancial sector, according to the subjects of the
present study, the majority of surveyed compliance ofﬁcers stated that they believe money
launderers target less regulated sectors such as retail, real estate or consulting. Compliance
ofﬁcers are especially concernedabout sectors in which cash payments are prevalent. These
include for instance antiquities, jewelry, art, gold and raw diamonds (Teichmann, 2016,
26 ff.). At the same time, the mobility of funds complicates jurisdictions’efforts to end
money laundering (Focus, 2015, p. 1). As a result, international efforts have so far proven
incapable of preventing the practice’s persistence (Harvey, 2004, p. 339; van Duyne, 1994,
p. 62; Walker, 1999,p.36).
This study focuses on money laundering in European German-speaking nations. In
particular, this paper explores how money launderers use consulting companies to launder
incriminated funds. Their use for money-laundering purposes is associated with a number
of risks and challenges for the launderer but can be a lucrative practice. Consulting
companies usually do not operate using cash, which makes themethod more suitable to the
layering and integrationstages than the placement stage.
Although prior research on money laundering exists, it usually focuses on prevention
efforts and regulations or provides the dimensions of money laundering. Researchers such
as He (2006) or Gittleman and Sacks (2005) discuss ﬁnancial institutions’obligation to
identify their customers and detail anti-money-laundering concepts such as the Wolfsberg
Principles, a “voluntary central code of conduct agreed to by 11 central banks”(He, 2006,
p. 62) or the USA Patriot Act, a money-laundering regulation relating to ﬁnancial
institutions. Others, including van Duyne (1994) or the FATF (2019), attempt to determine
the extent of money laundering. The literature review will demonstrate that current
approaches to combat money laundering are insufﬁcient. It will also be shown that money
laundering through consulting companies has thus far not been investigated in sufﬁcient
depth. In contrast to previous studies, this paper focuses on the speciﬁc actions money
launderers take to launder their incriminated funds without being detected. For this
purpose, the unique approach of interviewing both money launderers and compliance
experts was chosen.
Money laundering has likely existedfor as long as money (Muller et al., 2007, p. 3). Its main
purpose is to construct a legal history for illicitfunds (Van Duyne, 2003, p. 69) that prevents
illegally obtained assets frombeing traced to their true origins (Johnson and Desmond Lim,
2003, p. 7). The exact deﬁnition of money laundering varies between jurisdictions (Van
Fossen, 2003, p. 238). However,it is commonly acknowledged that money laundering is used
to hide the origin of incriminated funds and to integrate these into the legal economy (Art.
261 German Penal Code; Art. 305
Swiss Penal Code; FATF, 2019). One main source of
incriminated funds is organized crime (Gaetke and Welling, 1992, p. 1,243). Money
laundering is often associated with narcotics, but proﬁts from other criminal activities are
also regularly laundered (Levi, 2002, p. 182). These other activities include corruption
(Chaikin and Sharman, 2009, p. 24), prostitution, illegaltrade of arms (Lilley, 2003, p. 8), tax
evasion (Hampton and Levi,1999, p. 646) and ﬁnancing terrorism (Koh, 2006, p. 12 ff.).
Although money laundering is an ancient phenomenon, it was only declared illegal for
the ﬁrst time in 1986 (Sharman, 2008, p. 635). The war on drugs was in full effect in the