Money laundering may be a familiar-sounding term to Californians, especially those who read newspapers or watch movies, but you may not understand how the money becomes “dirty” in the first place, what money laundering involves or the laws that are in place to prevent and prosecute it.
According to FindLaw, dirty money is any money that which derives from criminal activity, including the sale of illegal drugs or stolen property; terrorist activities; white-collar crime, such as embezzlement or from organized crime. Money laundering, then, is the attempt to channel dirty money through legitimate channels in order to disguise its origin and make it appear “clean.”
Funneling money into legitimate channels often involves transferring large sums of money between accounts at different financial institutions. Therefore, the law requires banks to cooperate with authorities in reporting suspicious transactions and verifying customer’s identities.
Many laws against money laundering are more recent than you might expect. The federal government criminalized money laundering in 1986 with the Money Laundering Control Act. Prior to that, the Bank Secrecy Act required financial institutions to report suspicious activity or transactions involving large sums of money. Currently, the law requires banks to report transactions in excess of $10,000 although initially, the threshold was $5,000.
The focus of anti-money laundering laws has shifted over the years. Currently, the focus is on uncovering and preventing terrorist activity, while originally the focus was on combating organized crime and, later, fighting the war on drugs.
The information in this article is not intended as legal advice but provided for educational purposes only.