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What is money laundering?

On Behalf of | Feb 18, 2020 | federal offenses | 0 comments

During America’s prohibition era, Illegal alcohol sales allowed crime syndicates to gain vast amounts of money. Mobsters used money laundering to hide their tracks and give law enforcement the slip. Anti-money laundering laws do prevent many criminals from using these methods to legitimize their money. However, people still launder money every day.

When someone launders money, he or she is trying to make criminally obtained money appear as though it came from a reputable source. “Dirty” money passes through a real business of some kind. The legitimate funds mask the illegitimate funds. The launderer can then withdraw the “clean” money as cash.

Even if a person involved in a laundering scheme does not know where the money comes from, the state or federal government can charge him or her with money laundering. According to the Texas Penal Code, the state can accuse anyone who knowingly executes any part of a transaction involving illegally obtained money.

There are many ways a launderer can filter illegal funds through a legitimate activity. Any business can work, but it is most common in places where large amounts of money move freely.

  • Foreign investments—The launderer delivers illegal money in cash to a foreign investor. The investor then returns it to the launderer by “investing” in his or her legitimate business.
  • Cash businesses—Money funnels through a cash-heavy company. Businesses that regularly transact large sums in cash, such as a bar or nightclub, serve as laundering fronts.
  • Casinos—Money moves using the casino as the conduit. The casino converts the money to chips. The chips circulate briefly in the casino. The house then changes them back into cash.
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