What is money laundering

An estimated $800 billion to $2 trillion runs through the global "laundry cycle" every year. How does money laundering work?

money laundering

Money Laundering: Federal crime

In March of this year, the FBI indicted 75 people in connection with a money laundering and trafficking scheme worth millions. Government officers seized $6 million in cash believed to be in the process of working its way through the economy. As the defendants prepare for a lengthy trial, it makes one wonder: how does money laundering work? How much money is laundered in the global economy?

In fact, an estimated $800 billion to $2 trillion runs through the global “laundry cycle” every year. How does money laundering work?

the process

Money laundering is the act of concealing profits from illegal activities and converting it to what looks like legitimate assets. It involves the primary use of three steps: placement, layering, and integration.

First, Placement is just as it sounds: the act of putting the illegally acquired money into the economy. As the federal government cracked down on the use of the American financial system, money laundering pros have begun using casino spending accounts or buying large ticket price items and holding them for resale (think: big houses, cars, gold).

Next, the money begins to move again. The process known as layering makes the money difficult to trace by sending it to offshore bank accounts or into shell companies.

Finally, the initially “dirty” money is then integrated into the economy to be used again. 

History

Money laundering charges are often brought by prosecutors to increase the criminal sentences. It is a relatively new white collar crime. However, it is growing in popularity with the increase of online banking, making the money laundering process faster.

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