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How money laundering works

On Behalf of | Mar 6, 2020 | Criminal Defense

Money laundering is a serious crime that connects to large criminal organizations. However, even smaller operations can participate in this activity. Bloomberg explains that money laundering is the process of taking money made through illegal means and moving it through legitimate channels. This helps to disguise the origins and can give a legal façade to a criminal operation. 

The reasoning behind money laundering is to move large amounts of money without detection. If a person earns a large amount of cash through illegal activity, such as trafficking drugs, he or she cannot deposit that cash into a bank account. It will trigger some red flags and an investigation that may uncover illegal operations. This is where money laundering comes in. 

How it works 

The easiest way for a person to move large amounts of money into his or her bank account is through creating a front. Often, this is a legitimate business that operates within the community. The person may use the money to fund the company. This may include buying assets for the business. Ideally, the organization will be one that generates a lot of income. This allows the person to mix illegal money with legitimate business earnings. 

There is also another method of laundering money wherein the person makes small deposits into various banks. In general, any deposit under $10,000 will not cause suspicion. So, if a person has the ability, he or she could go across the country, depositing money in various banks that do not connect in any way. 

It is also possible to launder money through trading goods. Someone could move funds across the border by creating a fake shipment of goods, complete with a fake invoice. It looks legitimate, but what the person ships is actually money and not goods. 

There are many methods criminals use to launder money. The result, though, is always to find a way to legitimize ill-gotten gains.