Many people associate the term "money laundering" with organized crime activity or political corruption. A person doesn't necessarily have to be involved in a large-scale criminal operation to be charged with this crime. Further, someone may be involved in a money laundering operation without realizing it.
Money laundering is what the name implies: making "dirty" money "clean." That means taking funds gained from criminal activity and turning them into assets that can be used without arousing law enforcement suspicion. Sometimes this is done by putting the funds in a legitimate business. Other times, it's accomplished by making small deposits in accounts at various financial institutions and later withdrawing money. These activities are known as "placement" because they involve placing the money from criminal activity in the financial system.
Over the past half-century, federal laws have been enacted to make it more difficult for people to launder large amounts of money through banks. The Bank Secrecy Act, enacted in 1970, requires financial institutions to report single cash transactions over $10,000 to the government. Subsequent laws require reporting of suspicious activity, such as when someone seems to be deliberately avoiding the $10,000 reporting by making multiple deposits of a slightly smaller amount.
Once money is successfully placed, the next step is often to "layer" it. That often involves transferring it between accounts and corporations.
"Shell companies" are those formed solely to hide laundered money. Some foreign countries and islands, such as Cyprus, Jersey and the Caymen Islands, have lax tax laws that make it easy to form a shell company. However, some U.S. states like Delaware are also considered shell company havens. A 2017 article in The Atlantic magazine called the U.S. "perhaps the foremost shell-company provider globally."
After the money has been transferred a few times, people often buy property. Real estate is a popular final stop for laundered money because it can be a good investment.
Is Money Laundering a Priority for Law Enforcement?
An official with a non-profit organization working to expose corrupt economic networks asserts that law enforcement has not made cracking down on money laundering, which has been estimated to account for at least $800 billion globally, a priority.
Anyone being investigated for or charged with money laundering crimes needs to understand how serious the potential consequences are. Criminal defense attorneys with experience defending these and other white collar crimes can provide essential guidance.
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