Money laundering is a common term in mafia movies. You might hear of it in the news, where a criminal gangster was caught in money laundering, or businessman or politician is accused of money laundering. Money laundering sounds like a crime of dispositioning hundreds of dollars, but in reality, illegally transferring any amount of money is money laundering.
What is money laundering?
In a very simple language, money laundering means converting the money acquired from illegal and criminal ways into legal channels like a bank. According to the law, money laundering happens when somebody tries to hide or mask the nature, area, source, proprietorship, or control of unlawful movement.
The purpose behind money laundering may appear glaringly evident: to hide the source of the income. This way, criminals avoid tax. Pablo Escobar was a notable mobster. He was so amazing and cautious that agents couldn’t attach him to any of the more clear crimes in which he and his partners were locked in, similar to murder and racketeering. So the legislature needed to get imaginative, and they did. They reviewed Pablo’s budgetary circumstance and noticed that he had undeniably more money than he had ever asserted on his charges.
Why money laundering is illegal?
Those occupied with a crime immediately became sharp at either concealing their real pay and fortune or using confusion concerning its source. This is why money laundering was created. And this why money laundering is illegal.
What are some of the ways of money laundering?
Also known as “smurfing,” money is broken into small deposits of cash to reduce money laundering suspicions and stay safe from anti-money laundering reporting. Banks are required to report any deposit of more than $10,000. Money launderers also use small amounts of cash to by money orders or conveyer instruments, so they can deposit them later.
Mass Money Smuggling
Physically sneaking money into another country, typically abroad, and storing it in a budgetary establishment, for example, an offshore bank, with more prominent bank privacy or less thorough money laundering authorization.
Business with huge cash flow
A business normally associated with accepting money uses its records to store both genuine and criminally inferred money, guaranteeing every last bit of it as real income. Most appropriate is a service business such as parking garages, casinos, or strip clubs. As such, the business has no factor costs; it is difficult to recognize income inconsistencies.
The cycle of Money Laundering
As examined before, money laundering implies the inclusion of black money. Criminals follow different ways to hide their illegal money and convert it into white money.
The first step includes placing the bad money into a legitimate bank.
By making various transactions and bookkeeping, a layer is made on the different record exchanges. This conceals the cash from the first source and doesn’t show up as unlawful.
As the last advance, so as to incorporate the cash with the remainder of the clean cash, the proprietor of the illegal money takes it out from the bank and uses it as they need.