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Money laundering is the practice of engaging in financial transactions in order to conceal the identities,
sources and destinations of the money in question. In the past, the term "money
laundering" was applied only to financial transactions related to otherwise criminal activity. Today its definition is often
expanded by government regulators, such as the SEC, to encompass any financial transaction
which is not transparent based on law. As a result, the illegal activity of money laundering is now commonly practised by average
individuals, small and large business, corrupt officials, and members of organized crime, such as drug dealers or Mafia members.
If someone is making thousands of dollars in small change a week from his business, and he wishes to deposit that money in a
bank, he cannot do so without possibly drawing suspicion. In the United States, cash transactions and deposits of more than $10,000 are required
to be reported to the Financial
Crimes Enforcement Network (FinCEN), along with any other suspicious financial activity.
One method of keeping this small change private would be for an individual to give his money to an intermediary who is already
taking in large amounts of cash money. The intermediary would then deposit that money into her account, take a premium, and write
a check to the individual. Thus, the individual draws no attention to himself, and can deposit his check into a bank account
without drawing suspicion.
Another method involves establishing a business whose cash inflow cannot be monitored and funneling the small change into this
business and paying taxes on it. All bank employees however are trained to be constantly on the lookout for any transactions
which appear to be an attempt to get around the currency reporting requirements.
By the strictest definition of the term, anyone who assists in concealing the proceeds from his transactions is considered a
money launderer. An individual therefore may be unwittingly employed by money launderers, and may still be criminally liable in
many jurisdictions. Large multinational financial institutions have established private banking businesses to aid wealthy individuals who do not wish to reveal the details of their
transactions.
The term "money laundering" is said to have evolved from the Prohibition
era in the United States. Many methods were devised to disguise the origins of money generated by the sale of then-illegal
alcoholic beverages. One method was legal gambling via slot machines—a way to
efficiently transform giant volumes of coins into easily movable currency. Another business so employed was laundries, and from
this particular aspect of the trade, the term "laundering" emerged.
External link
- What is Money Laundering? from CounterMoneyLaundering.com
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