A: Most people have a vague idea that money laundering is bad, but have no idea what it is or how to do it. (What kind of detergent are you supposed to use anyway?). Actually, money laundering is using financial transactions to conceal the identity, source, and destination of money. In other words, if you have some dough that you acquired illegally, you probably want to make that money appear clean, or lawfully acquired. The most common method of laundering money is to give illegal income to a legitimate business already taking in large quantities of cash, so that it can be deposited without arousing suspicion.
The term probably arose in the 1930s, when gambling rings opened up launderettes to disguise the influx of small change. Other methods in use are ingenious in their complex maneuvering around international financial reporting regulations. International terrorists, for instance, tend to use legitimate charities to funnel money into arms purchases and other nefarious doings. Of course, because of lax reporting laws and corrupt officials, some countries are better for cleaning one’s cash than others. Among the favorites are China, the Cayman Islands, the United Arab Emirates, Thailand and Lebanon. Obviously, we are not suggesting here that you should go steal money and launder it in these countries; but if you do, just remember to be careful: separate the whites from the colors, and use a cold water rinse.
Article comments
1 - Matthew T. Sussman
And here I thought it was, "To channel money through a source or by an intermediary."
2 - Ho Hum
This explanation is simplistic to the point of being misleading, and in some areas it is simply incorrect. That which is correct is derived from other (uncredited) sources. If you want to know about money laundering, find a real expert.
3 - RJ Elliott
I thought money laundering was when you left a Lincoln in you jeans on wash day...
But then again, I have an extra chromosome. It helps.
4 - Phillip Winn
Tough crowd -- but you're wrong, dear anonymous one. Read the article, in which it is stated that "money laundering is using financial transactions to conceal the identity, source, and destination of money." If that's not correct, then every definition I've ever read is incorrect.
I know only a little about money laundering, but the answer given by MF is absolutely correct, if not an extensive how-to guide on money laundering. You want a how-to guide, spend a few years locked up in prison and ask for Ralph.
5 - Lyndhurst Bodden
It's always so easy to name foreign countries when talking about money laundering, yet, more money laundering and financial fraud happens in the USA more often and on a greater scale than anywhere else in the world.