What is money laundering?

On Behalf of | Mar 20, 2023 | White Collar Crimes |

Money laundering is a white-collar crime involving finances and covering up illegal activities. It is a common crime occurring in conjunction with other criminal activity.

The FBI defines it as a way for individuals to legitimize money collected through illegal means.

How it works

Money laundering occurs in a variety of ways. Basically, it involves a person who gets money through illegal activity and needs to find a way to move that money so that authorities cannot trace it back to the original source.

To do this, the person may run the money through a legitimate business. For example, he or she may open a laundromat and funnel the ill-gotten gains through it by depositing the illegal money in place of or alongside the money actually earned in the business.

The benefits of the process

Laundering money enables the person to create a legal origin for the money. If someone were to trace where it came from, they would go back to the business that is legally operating.

Having traceable funds is important because people suddenly having large amounts of money with no identifiable source raises red flags with authorities. If the person is under suspicion for illegal activities, it only adds to the case against him or her.

Uncovering money laundering can be difficult. It often takes a lot of investigation and time to find these operations and then additional work to get evidence that a crime is occurring. Still, it is a serious crime that often allows authorities to bring down large criminal operations.