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The dark side of music: how musicians can be used for money laundering

The Internet was set agog when a young, budding artist in Ghana announced his upcoming concert on Twitter. This was during the height of the COVID-19 pandemic and its impact on the economy, with some restrictions having just been lifted.

One reason for the outrage was the steep ticket prices, with the cheapest ticket costing a staggering GH¢2000 and the most expensive going for GH¢20,000. This led to widespread discussion on social media, with one question at the forefront of everyone’s minds: “Why charge so much during a pandemic?”

“Nuumo3” as a Risk and Compliance professional with a sceptical mindset, I suspected that the concert and the musician could be used to launder dirty money. First, let’s educate ourselves on the concept of money laundering.

Money laundering is the process of making illegally obtained funds appear legal through various transactions and hiding their source. This illegal activity is often associated with organised crime, drug trafficking and terrorism. While various businesses and industries can be used for money laundering, the music industry is not immune to this threat.

Musicians, music labels, and concert venues can all be used as conduits for money laundering. For example, a criminal organisation may purchase a music label and use it to launder their money by inflating the cost of recording contracts and distributing the profits through shell companies. Additionally, concert venues may be used to launder money by overcharging for tickets, merchandise, and services. In these cases, the profits generated from the inflated prices are funnelled back to the criminal organisation, making the money appear legal.

Moreover, musicians themselves can also be used for money laundering. For example, a criminal organisation may use a famous musician to launder money by paying them for a performance, but then reporting the payment as a business expense. This allows the criminal organisation to deduct the amount paid to the musician from their taxes, effectively hiding the origin of the money.

Governments and law enforcement agencies around the world are actively working to combat money laundering in the music industry. This includes implementing anti-money laundering laws, conducting investigations and audits, and cooperating with other agencies and organisations to identify and stop illegal activities.

The regulator in Ghana can implement several measures to mitigate the risk of money laundering in the music industry, including:

  1. Anti-Money Laundering (AML) laws

Governments can enforce AML laws and regulations to ensure that businesses in the music industry follow strict reporting and record-keeping requirements. This helps to identify suspicious financial transactions and prevent money laundering.

  1. Enhanced due diligence

Governments can require enhanced due diligence procedures for music industry businesses, such as increased background checks on owners and managers to prevent individuals with a history of illegal activity from participating in the industry.

  1. Increased monitoring and surveillance

Governments can increase monitoring and surveillance of the music industry to detect and prevent money laundering activities. This may involve the use of financial intelligence, audits, and other investigative techniques to detect suspicious transactions.

  1. Cooperation with international agencies

Governments can collaborate with international agencies, such as Interpol and the Financial Action Task Force (FATF) to share information and resources in the fight against money laundering in the music industry.

  1. Public awareness and education

Governments can raise public awareness and educate the general public and the music industry on the dangers and consequences of money laundering. This can help to create a culture of compliance and reduce the risk of money laundering in the industry.

Conclusion

By implementing these measures, the government can reduce the risk of money laundering in the music industry and help to protect the integrity of the industry and the public. While the music industry is a creative and enjoyable aspect of our lives, it is not immune to the threat of money laundering. Musicians, music labels, and concert venues can all be used to launder money, and it is important for governments and law enforcement agencies to stay vigilant in their efforts to combat this illegal activity.

>>>The author is a chartered accountant and a risk and compliance professional. You can contact him via percyboye@gmail.com

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