Money laundering is the crime of receiving money through illegal activity, hiding it and then using it through legitimate channels. If you have ever watched a mob movie, you have probably seen something about this process.
Mob bosses aside, people still get charged and convicted of the crime. What is money laundering? Take a look at some of the hallmarks of this white-collar crime.
How does the process of laundering money work?
When someone obtains money through illegal activity, they do not want to tip off the authorities that they have it. They need to find a way to hide the money until it can get processed through legal financial channels without the authorities knowing. It is a four-step process:
If a person gets caught in the act of any of these steps, she or he faces a money laundering charge.
How does the money get cleaned?
In the laying portion of the scheme, the hidden funds get passed around, much like a shell game. In the technology era, it is easier to establish dummy companies and bank accounts, much of which can be accomplished online. It is through this network of fake company accounts that the laundering occurs. Transferring the funds from one account to another for an indeterminate amount of time makes it more difficult to track and find.
How does the money wind up getting used?
Once the money has been passed around a number of times, it is used to purchase legitimate products, such as boats, cars and real estate. Other times, it may get withdrawn and used at brick-and-mortar stores in exchange for goods. Sometimes, the money gets used at casinos, both online and offline.
Money laundering penalties vary from jurisdiction to jurisdiction. In California, a person convicted of laundering at least $5,000 faces a minimum of one year in jail or prison. However, the state recently modified jail time for money laundering, correlating the time in custody to the amount taken. The more money cycled in the scheme, the longer the jail time.