Houston Criminal Law Blog


What is Money Laundering?

White-collar crimes are illegal activities that most often take place in a business or corporation. These crimes usually consist of attempts to illegally obtain money and then conceal the stolen funds. Covering up the process of stealing money by making the funds appear legitimate is known as money laundering. This activity got its name because white-collar criminals try to make stolen money appear “clean,” as if the money is profit from a legitimate business. Money laundering is one of the most common white-collar crimes committed each year. Although money laundering can occur in different forms, there are several stages that are common to any laundering scheme.

The Money Laundering Process

Money laundering begins with an effort to disguise illegal funds. This is known as placement. The money is placed into an account that is linked to a legal business. This cover makes the money appear to be legitimate profits from normal business transactions. The dirty money may also be used to obtain forms of currency that appear to have no link to the illegal activity. These forms of currency can include traveler’s checks or money orders. Sometimes the illegal cash is used to make purchases that seem normal, like real estate or property.

Next, laundered money is made harder to trace in a process called layering. This means that the money is shifted around so that it will be harder to link back to the original crime. The money may be sent to multiple bank accounts or sent to different businesses. Sometimes the funds are placed into foreign accounts and property obtained with the original money is sold off. Finally, the money is returned to normal financial areas. This is known as integration. White-collar criminals will make legal purchases with the “cleaned” money. This final step makes the illegal money seem to disappear into the economy, making it very difficult to trace.

The Problem With Money Laundering

Money laundering is a serious problem because it undermines legal business practices. It damages the trust between customers, businesses and banks upon which the economy depends. Laundered money also plays a big part in criminal networks by funding drug smuggling, terrorism and illegal arms deals. Sometimes the money will be used to bribe officials or businesspersons, making instances of corruption more frequent. In order to combat the negative effects of money laundering, government institutions have taken steps to uncover illicit transactions or suspicious financial activity. Some of these organizations include:

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