How Criminals Launder Billions of Illegal Money
Don’t sue me if you get caught
Al Capone was one of the biggest criminals in history. He had made over $100 million, or $1.4 billion in today’s money through various criminal activities. When he was arrested, he could only be accused of tax evasion.
The police had one problem: they couldn’t find the money.
Al Capone had laundered the money.
Money laundering is a process to convert money obtained from an illegal source into clean money. This was often done through cash-only laundromats, therefore the name money laundering.
Today, there are various ways to launder money but they all have three steps in common:
1. Placement
The placement of the illegal money is when the criminals are the most vulnerable since the origin of the money is unknown. The first step involves converting the dirty money into legitimate assets, like a business or other legitimate assets. They must first deposit the money into a bank account. The owner of the bank account is often registered to an anonymous corporation.
2. Concealing
When concealing dirty money, a massive amount of transactions are made to dissuade the true origin of the money. This is often done by purchasing tradable assets like real estate, expensive cars, or artwork. Casinos are also a popular option among criminals to conceal money. They often rig the game in order to make it seem like they won the money.
3. Integration
Integration is the final step of money laundering. This involves investing concealed money into various legal businesses. The income from the businesses is often made through fake clients. They might even donate money to a charity in which they are on the board of directors with an enormous salary.
Nobody knows the exact amount of money that is being laundered every year, but experts estimate it to be in the hundreds of billions.
Money laundering wasn’t officially recognized as a crime until 1986. Before 1986, criminals had to be prosecuted for other charges like tax evasion. When money laundering became illegal, the global hunt for criminals accelerated.
With the steps shown above, it might seem easy to launder money, but it isn’t. Governments are more aware of money laundering and banks require you to report every single transaction above $10.000. Special algorithms allow banks to easily spot any suspicious activity.
Although these measures haven’t caught many criminals, when you get caught, you can go up to jail for 35 years and be fined up to 3 times the amount you have laundered.
Before you leave
Consider reading my other articles:
Disclaimer: I cannot be held responsible if you decide to do any illegal practices.
This story was originally featured on Ted-Ed
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