Summary Money laundering is the illegal process of converting money earned from illegal activities into “clean” money – that is, money that can be freely used in legitimate business operations and does not have to be concealed from the authorities.
The money laundering process usually goes something like the following: 1 Initial placement#N#A criminal or criminal organization owns a legitimate restaurant business. Money obtained from... 2 Layering the money#N#To deal with tax issues – that is, to avoid having the restaurant incur too large a tax bill as a... 3 Final integration More ...
Money obtained from illegal activities is gradually deposited into a bank through the restaurant. The restaurant reports daily cash sales much higher than what it actually takes in. Say, for example, that the restaurant takes in $2,000 in cash in one day.
Many different legal authorities regularly investigate suspected money laundering activities. In the United States, the FBI and the IRS are the two primary agencies that handle money laundering investigations. Money laundering’s become such a huge problem that international agencies are specifically created to combat it.
Money laundering is a process that criminals use in an attempt to hide the illegal source of their income. By passing money through complex transfers and transactions, or through a series of businesses, the money is “cleaned” of its illegitimate origin and made to appear as legitimate business profits. Gross Profit Gross profit is the direct profit ...
In fact, the origin of the term “money laundering” comes from infamous gangster Al Capone’s practice of using a chain of laundromats he owned to launder huge amounts of cash. The money laundering process usually goes something like the following: 1. Initial placement.
Because money laundering is a key part of terrorist organizations that are usually funded through illegal enterprises, the FATF was also charged with directly fighting to cut off illegal cash flows to terrorists and terrorist groups.
A criminal or criminal organization owns a legitimate restaurant business. Money obtained from illegal activities is gradually deposited into a bank through the restaurant. The restaurant reports daily cash sales much higher than what it actually takes in.
Once the money has been deposited with the shell company, the criminals can access it by having the shell company invest in another business the criminals own , perhaps by making a loan of the money to the other company.
Real Estate Real estate is real property that consists of land and improvements, which include buildings, fixtures, roads, structures, and utility systems. Property rights give a title of ownership to the land, improvements, and natural resources such as minerals, plants, animals, water, etc. .
The “layering” often involves passing the money through multiple transactions, accounts, and companies – it may pass through a casino to be disguised as gambling winnings, go through one or more foreign currency exchanges, be invested in the financial markets, and ultimately be transferred to accounts in offshore tax havens where banking transactions are subject to much less scrutiny and regulation. The multiple pass-throughs from one account, or one enterprise, to another make it increasingly difficult for the money to be traced and tied back to its original illegal source.