What Types of Crimes are Considered Money Laundering?

Money laundering is the criminal process of transforming ill-gotten gains from serious crimes into the appearance that they are indeed legitimate assets. Here, we break down what sorts of crimes are considered money laundering and how the definition works in the real world.

Money Laundering: Three Steps

Money laundering is not a simple process, as you may imagine. It takes a lot of intentional work to make it appear that money from drug trafficking, for example, is actually profit from a legitimate business. Most money laundering efforts involve three steps in the cleaning process, moving the money from dirty to clean and legitimate.

Step One: Placement

Placement is the first step in the money laundering business. “Dirty money” (those profits from serious criminal activities) is discretely introduced into the legitimate financial system. This means it’s deposited into a legitimate financial institution, and by its nature, is probably the riskiest step of money laundering — large sums of cash are suspicious, and banks are required by law to report large transactions.

Step Two: Layering

Next, this money is moved around in hopes of creating confusion. This helps change its form and can be difficult to follow, both of which are goals of the process. One way money laundering is accomplished is by wiring or transferring the money through multiple accounts with different names in different locales.

Also, large purchases can be made, such as jewels, homes, or vehicles, which changes its form. These complex transactions, multiple accounts and frequent moves help water down and disguise the ownership of the funds. The goal of this step is making the original money extremely difficult to trace.

Step Three: Integration

Integration is usually the last step in money laundering. One of the more common ways is when a criminal organization develops a legitimate, cash-only business “front.” By slightly inflating the daily income with some book cooking and daily-take falsification, the money then becomes clean and legal.

It can also involve a bank transfer of a local business disguised as investing. Also, selling large assets collected during the layering step is another way to integrate the funds into legal currency, as is purchasing something from a company run by the launderer for inflated prices.

Money Laundering is No Mistake

You can’t launder money by accident. It takes time, resources, coordination, cooperation, and criminal intent to launder dirty money into clean, legit dough. Criminal activities, like drug trafficking, terrorism, and white collar crimes often turn to money laundering to keep the financial end of their business on the up-and-up in hopes of not arousing suspicion and avoiding prosecution.

There are, however, departments in organizations (such as the Department of Justice, the Federal Bureau of Investigation, the Internal Revenue Service and the Drug Enforcement Agency) dedicated to investigating money laundering.

And since many money laundering schemes involve global financial systems, the international Financial Action Task Force on Money Laundering works to combat laundering on a worldwide scale.

Money laundering takes funds from illegal activities and turns them into legitimate financial assets. While it isn’t easy, and there are organizations that are dedicated to recognizing and prosecuting those involved, it’s not an accident when money gets laundered, and penalties are stiff.

If you are being charged with money laundering, schedule a consultation with our attorneys. We’re happy to discuss your case and how we can help.